What retail apocalypse?

Discussion
Photo: Walmart
Dec 27, 2017
Tom Ryan

While the disruption that has resulted in the closure of thousands of stores has been the talk of retail this year, the industry just scored its best holiday period since 2011.

That’s according to Mastercard SpendingPulse, the first firm to release its holiday recap. Sales from November 1 through December 24 expanded 4.9 percent vs. the previous year period, setting a new record for dollars spent. Mastercard tracks retail spending by all payment types.

“Overall, this year was a big win for retail,” said Sarah Quinlan, SVP of Market Insights, Mastercard, in a statement. “The strong U.S. economy was a contributing factor, but we also have to recognize that retailers who tried new strategies to engage holiday shoppers were the beneficiaries of this sales increase.”

Some key findings from the Mastercard SpendingPulse report:

  • Home goods: Electronics and appliances jumped 7.5 percent, the strongest growth of the last 10 years. The home furniture and furnishings category grew 5.1 percent, as did home improvement.
  • Apparel: Despite the massive store closings affecting these channels, specialty apparel and department stores saw moderate gains.
  • Heavy early-season promotions: The first three weeks of November saw significant jumps.
  • Last-minute spending: December 23 ranked close to Black Friday in terms of single-day spending.

The holiday gains were attributed largely to healthy job growth, coupled with modest inflation, moderate wage boosts, consumer confidence being at an all-time high, and some timing benefits.

“You had a unique Christmas this year, which fell on a Monday,” Sucharita Kodali, at Forrester Research, told USA Today. “That means people are with their families on the days leading up to it. It’s very conducive to store shopping. This is an unusually good year where a lot of things came together to favor the stores.”

The gains in Mastercard’s survey were led by online shopping, the sector being blamed for disrupting retail in recent years. Online grew 18.1 percent over the holiday period, boosted by a late season rally. On Tuesday, Amazon boasted about a robust holiday performance, including adding more than four million Amazon Prime free trials or paid memberships in one week alone during the holiday season.

DISCUSSION QUESTIONS: What do you think drove the apparent healthy holiday gains this holiday season? Are retailers adapting better than many predicted to the overall disruption caused by the impact of online and mobile?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"...many brick-and-mortar retailers stepped up to the challenge of online shopping by offering greater and more engaging shopping experiences in-store."
"The economy was clearly the biggest driver, with strong employment and consumer confidence."
"Several factors came into play, including low unemployment, the “wealth perception” of high stock prices and a break on the weather..."

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32 Comments on "What retail apocalypse?"


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Mark Ryski
BrainTrust

The U.S. economy, by every measure, has been performing very well over the last year and it’s not all that surprising to see this translate into a great holiday season for retailers. The timing of Christmas didn’t hurt either. I do believe that retailers are better adapting to the impact of online and mobile, in fact, retailers are disrupting themselves. While one good holiday season doesn’t necessarily quiet the death rattle some have predicted for retail, it certainly shows the resilience of the industry.

Zel Bianco
BrainTrust

A few things were big factors this year. A long weekend allowed last-minute shoppers like me the opportunity to pick up a few more things. I think this was the case for many men. Consumer electronics were big winners as well, namely with Echo and its competitors, but it should be noted that 4K TVs were selling at a very brisk pace given the crazy low prices that were being offered. As I’ve commented before in previous posts, the industry says the sky is falling and what I see is that stores this year could not have been more crowded. Could it be that perhaps some of the store closures are just part of the normal adjustments that needed to be made as some retailers expanded too fast and sometimes in the wrong locations? That remains to be seen, but at least there were be some positive signs this year that will make the upcoming NRF less dreary.

Michael La Kier
BrainTrust

The economy has been in a long growth period and — it seems — people are ready to spend. This year retailers also discounted healthily on some key items shoppers have had their eyes on for awhile (Amazon Echo Dot is the number one seller at Amazon). Combine this with the calendar when Christmas falls on a Monday and it’s a recipe for success. HOWEVER, higher consumer spending does not mean that all of retail is saved. Like always there are winners and losers and we’re sure to see multiple retailers who did not hit their numbers go out of business at the beginning of 2018.

Paula Rosenblum
BrainTrust
Okay, I’m going to ask for some props here. Greg Buzek and I started beating the drum of the “apocalypse” as a false flag back in April. We knew it before, but we were sitting on a stage as a panel at a user group conference and that’s when we really started beating the drum. This was ALWAYS clickbait. Always. It goes with the “7.5 million retail jobs lost to automation” and “23 percent of malls closing in three years” clickbait. I think they call it “hogwash” in the Midwestern U.S … and having read the original “research” on all three stories, I’m quite comfortable calling it the same. What caused the healthy gains? I think retailers bought a bit less, we finally saw an end to the “race to the bottom” (effectively, there’s not much lower you can go and stay in business) … price parity is mostly achieved, and retailers avoided some of the doorbuster insanity of years past. Turns out it made for a better shopping experience anyway. I am really curious… Read more »
Dave Bruno
BrainTrust

Okay, Paula, you definitely get “props” from me! I remember when I first heard what you and Greg were discussing at our User Conference in May, and it struck a nerve. Prior to that point, I thought retail was doing better than people were saying, but it was really hard to believe it with so much bad retail news dominating every news cycle. But the minute I heard you guys, it was like a beacon in the darkness. And the holiday season was, just as you and Greg predicted, a testament to the idea that retail is (finally) adjusting and evolving to the drastic shifts in business conditions that have been occurring for the better part of the last decade. In my opinion, the future looks bright.

Brandon Rael
BrainTrust

It’s honestly a combination of factors that have contributed to the overall gains in the retail industry. Retailers have been increasingly responsive; delivering the right combination of curated assortments, pricing and promotions to the ever-agile, empowered, digitally-connected and mobile-first consumer.

It also is a significant advantage to have very positive public relations around the leading economic indicators. If anything, the fourth quarter and the holiday season have demonstrated just how significant the retail and CPG industry sectors are to our overall economy, job market and confidence as a nation.

Perhaps with the emergence of a commerce model where you can shop where, when and how you wish, retailers have the ability to engage with the digital-first customer well beyond Black Friday. Overall, we can all admit that there is an overall positive feeling going into 2018 for the retail industry as it continues its evolution — not necessarily the apocalypse.

Phil Chang
BrainTrust
Phil Chang
Retail Influencer, Speaker and Consultant
10 months 20 days ago

I will join the applause for mocking the retail apocalypse. I hate that phrase. Retail is a changing game, and will continue to evolve. As with all things that change, this year was about trying new things and presenting fresh options for consumers to purchase what they want, when they want it and by the end of the year, they could receive it almost right away.

Success this year was simply putting multi-channel into play. Folks were able to buy online or in-store and feel like they weren’t missing anything or excluded from deals one way or the other. Bravo to the retailers who tried new. Make sure your list has new next year — retail is all about making next year better than this year!

Max Goldberg
Guest

It’s the economy. The growth, albeit modest, in household income, allowed consumers to spend more this holiday season.

Ed Dunn
Guest
10 months 20 days ago

There is really one factor — the rise and mass adoption of Bitcoin during the year created consumer confidence to take profits and go out and spend. It is not fair to discount or dismiss the role Bitcoin mass adoption played in 2017.

Bob Phibbs
BrainTrust

You’re joking, right?

Chuck Palmer
BrainTrust

Ed, could you elaborate? I have to admit I haven’t studied Bitcoin so I don’t see a connection here. I might be thrown by your use of “mass adoption.”

Ken Lonyai
BrainTrust

“Retail apocalypse” has been a really great headline phrase for those publications and pundits grasping for attention. The reality is, capitalism always prunes weak competitors from the market, sometimes in bunches like we’ve seen in retail for the past few years. The headline drama is overblown and part of the evolution of the same retail vertical that lost many household names pre-internet.

Still, a decent economy may be behind all the spending right now. If economic factors including employment turn for the worse, it’s likely that physical retailers will bear the brunt far more than digital counterparts and the pundits will rev up the apocalypse predictions all over again.

Importantly though, the seasonal growth numbers reported do portend a message/warning: m-/e-commerce growth is still far outpacing brick-and-mortar growth. If that sustains at rates outpacing GDP growth (as it has), a reckoning has to come.

Phil Masiello
BrainTrust

I believe it was driven by two factors. First, the discounts were stronger than in years past as retailers wanted to drive traffic and sales. Advertising on mobile and other digital platforms was higher than in years past. Many retailers were trying to lure shoppers away from Amazon and get them into their stores.

Second, the economy has been performing very well. Whenever we have growth in the stock markets, people feel wealthier and spend more. All-in-all, between brick-and-mortar and online, it was a fairly healthy spending season.

Whether retailers are adapting to an omnichannel world has yet to be seen for the long-term. There are still many major retailers whose basic digital functionality is far behind those of their competitors. But this holiday season was certainly a boost for many.

Adrian Weidmann
BrainTrust

The physical store will NOT go away. The store will continue change and evolve to meet the aspiring expectations of the digitally-empowered shopper. We are all learning to adapt and address the changes that need to happen in order to survive the evolution and shopping revolution. The retailers and manufacturers that are experimenting are winning. Those that don’t and continue to bury their heads in the sand will be marginalized and perish.

Tom Erskine
BrainTrust
10 months 20 days ago

Consumer confidence and wage gains among the middle class drive retail sales, and we are finally seeing that in the U.S. Add to that the timing of Christmas on a Monday and you get a great year for stores. But for some retail formats, this is only a reprieve.

Indoor malls, large-format department stores with minimally differentiated collections, etc. may have been granted a reprieve this holiday, but the long-term forecast is not good. In the meantime, retailers that continue to innovate are seeing strong performances, and there are plenty of new entrants from the e-commerce world that recognize the need for a physical presence.

Dick Seesel
BrainTrust

Several factors came into play, including low unemployment, the “wealth perception” of high stock prices and a break on the weather that helped drive sales of seasonal goods. But I think there are two other key factors in this holiday season’s apparent success: First, the large number of store closings during the first half “cleared the deck” for those left standing to gain market share. And even more important, most brick-and-mortar stores finally figured out how to leverage their own e-commerce business into a true “omnichannel” experience for their customers.

Cynthia Holcomb
BrainTrust

The economy and the promise of the new economy coming our way. A weeding out of “mass vanilla” retailers, brands and products. The huge reinvention of a few large retailers transitioning from frumpy to current, via emotionally-driven pop music ads. And finally, product. Diversity in product for the first time in years. Walk the Target floor; it’s starting to look like the “cool” Target of the past styled for the M and Z generations.

Kevin Sterneckert
Guest
Ok, so we all know there was hype in the “apocalypse” reporting that we were subjected to in 2017. I do want to note, for many retailers, the apocalypse was very real — according to bankruptcydata.com there were 662 retail bankruptcy filings in 2017 up 30 percent from 2016 — there were more than 7,000 store closings. Where the reports got it wrong was trying to claim that retail is dead … really? Online sales for the 2017 holiday season were up 18.1 percent according to MasterCard. I agreed with Paula and Greg and frankly a number of other students of retail — yes, bad things did occur and will continue to occur, but retail is not dead. Retail as we knew it has dramatically changed and, for the most part, changed for the better. It will soon be a distant memory to wonder if a retailer has what you need in stock, or to make a purchase only to find out later that the item was sold for a lower price somewhere else, or… Read more »
Mark Price
BrainTrust

The economy was clearly the biggest driver, with strong employment and consumer confidence. In addition, market consolidation may have improved overall customer experience and resulted in consumers purchasing at higher levels than previously. The higher customer experience is likely driven by omnichannel behavior, which the best retailers have invested in.

Shep Hyken
BrainTrust

A big reason for the great numbers is the economy. People have confidence in their jobs and the stock market. Unemployment is very low and that is a good thing for retail and the economy. As for store closings, that is not so much to do with the economy as over-saturation and the lack of balance between in-store and online retailing. The company that gets that balance right will prosper.

Karen S. Herman
BrainTrust

While a stronger economy and lower unemployment rate contributed to opening the pocketbooks of shoppers this holiday season, it is important to mention that many brick-and-mortar retailers stepped up to the challenge of online shopping by offering greater and more engaging shopping experiences in-store. From POP-in@Nordstrom to Everlane’s first store in New York City to the sleek integration of IoT in Fabletics stores, brick-and-mortar retailers gave shoppers many reasons to visit and purchase in-store this holiday season.

Sterling Hawkins
BrainTrust

It was easy to let the record store closings overshadow the record store openings that happened during the exact same time period. Change can cause upset/worry and that’s exactly what we were seeing: change. It looks like retailers are finally starting to address that brick and mortar is changing (not going away) and benefiting from the results. The boost from the economy and holiday timing only helped.

Peter Charness
BrainTrust

Apocalypse? Retail up solidly this year … Customers spending in near record amounts … usual question each retailer needs to ask: are you getting your fair share of wallet? If not, how can you provide a better experience to the customer through product, price (still up there) and convenience (rapidly becoming the cornerstone)?

Jeff Miller
BrainTrust

A few key points on a healthy holiday season:

  1. Strong economy;
  2. Timing of the weekend;
  3. Competition is good and creates change and innovation for retailers to do better to attract and keep customers. Many retailers have made those tough changes;
  4. The key part of the question is “better than many predicted.” The predictions are always more dramatic than reality. Online, mobile, voice and Amazon will continue to eat away at brick and mortar retail but smart retailers will adapt. In-store retail is in decline, but is far from dead.
Craig Sundstrom
Guest

It’s not (entirely) coincidence that this report came from a credit card company, because credit is no small part of this “healthy” holiday, and credit is great until someone finally has to pay the bill(s).

The country has a long-term problem with income growth — at least among the overwhelming portion of the population we call “consumers” — not dealt with in the minor blips of comp sales. For traditional store based retailers, combined with the challenges of online, it’s a double-whammy.

Chuck Palmer
BrainTrust

The news of retail’s demise has been greatly exaggerated. I wonder if we are seeing a behavioral shift fueled by a strong economy? Retailers and brands are getting better at incorporating benefits to the flow of online/in-line behavior and customers are now more likely to try out some of these new techniques, like click and collect. It may be the combination of financial confidence, the calendar and the smoothness of logistics have allowed us more latitude in how we both procure the things we know and shop for new things.

And if there is anything apocalyptic, it’s real estate, not retail. I doubt customers this year are freaking out about less Sears stores or the dead mall closing. Consumers have plenty of options for goods and services; they don’t really care about the portfolio of mall management companies.

Ken Morris
BrainTrust

Despite all the gloom and doom news of bankruptcies and store closures that garnered the headlines and captured everyone’s attention in 2017, the economy is in very good shape. With consumer confidence in November at the highest level in 17 years and a year-to-date retail sales increase of 4.1%, retail was primed to have a great holiday season.
 
Retailers seemed better prepared for the holiday season this year, which also helped boost sales numbers. Retailers started promotions earlier to correspond with consumers’ desire to begin their holiday shopping sooner.  Stores also seemed better staffed to accommodate the surge of shoppers and omni-channel sales processes, like BOPIS, were more fine-tuned than they were last year.  All of these dynamics poised retailers for a banner holiday season.

Lee Peterson
BrainTrust

No one in their right mind said there was an actual retail apocalypse, other than the mainstream media (although some of us repeated the term, ahem). Retail has just changed dramatically, and forever.

Besides, stop bragging. Retail SHOULD be better than ever; it’s a consumer paradise! Anything you want at just about any price you want, when you want it, how you want it, from anywhere you want it from — what’s not to love about retail right now? The only apocalypse is for those who can’t keep up with that last idiom.

Brian Kelly
Guest
10 months 20 days ago
An apocalypse is a disclosure of knowledge or revelation. It is neither cataclysm nor catastrophe. The age of austerity we’ve lived in since the collapse of Lehman Bros has been a revelation. The economic implications: cratering of rural communities and urban consolidation forced irrelevant retail to fail. It was most informed by the POTUS election. A national, underserved market was exposed. And a new generation coming of age is fundamentally living a life very different from their Boomer predecessors. This was exacerbated by online retail and Amazon in particular. And Holiday Selling Season still came. In those urban areas enjoying economic boom, retail sales have exceeded expectations. Pent up demand? Promise of tax cut? 401K performance? The return of “Merry Christmas”? A high tide floats all boats? Certainly over the past 5 years, retailers have made changes to their selling model. Some were successful and some weren’t. Mass merchants remain challenged, discounters comped, specialty retailers are a mixed bag depends upon the category. In 2018, chains will continue to shrink and some will go away.… Read more »
Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
10 months 20 days ago

There is no retail apocalypse. There are serious challenges, as in any business. But too many pundits and futurists forget that people are people. They still like to see, touch, hold, and that means they like to shop.

Were an apocalypse to evolve, it would come when retailers forget that they only exist to connect people with products & services they want to buy. And while there are many subtleties in doing that and many important elements to lay on top of that (like what the experience of the consumer is while in their stores), it’s still all about products and services.

Why products? People find products inherently interesting. They like to look at and have ability to choose form a variety. They like to learn about new products. They like to be able to get staples in a welcoming, effective environment. They….

Yes, there’s far more to retail success than merely products. But retailers run serious risk today of delivering a bland and uninteresting product assortment that no clever store or online experience can overcome.

Min-Jee Hwang
BrainTrust

I think the holiday gains resulted from a joint effort. As the economy improves, shoppers had more money in their pockets this year. And retailers provided a longer promotions season to make the most of it. With promotional emails, TV commercials, social media posts, you name it, shoppers were reminded at numerous times each day that there were great deals out there, no matter what they were looking for. With mobile driving significant traffic, retail winners optimized their sites to provide a truly omnichannel experience this year.

Vahe Katros
Guest

While reading this I thought: How about a post-apocalypse door buster sale with prices rolled back to biblical times — or — forming a committee to study EDLA business model optimization as in Every Day Looming Apocalypse!

But seriously, the issue is not the apocalypse, the issue is solving the problem of e-packing material pollution — “the horror, the horror.”

wpDiscuz
Braintrust
"...many brick-and-mortar retailers stepped up to the challenge of online shopping by offering greater and more engaging shopping experiences in-store."
"The economy was clearly the biggest driver, with strong employment and consumer confidence."
"Several factors came into play, including low unemployment, the “wealth perception” of high stock prices and a break on the weather..."

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