Holiday Sales Update #2 - Holding Pattern

SALES UPDATE

Last week proved to be an interesting week. While overall results remain positive, we have several more clients reporting that sales were soft last week. This is unexpected because we are comp’ing election week last year, which I think we can all agree created some turmoil. While we are hearing mail delivery was slow around Veteran’s Day, that would not be enough to create a slow-down. On the flip side, catalog volume was huge last week (more on this below), and most of our clients are still reporting results are up 5-10% to LY. Here are a few comments on major categories:

  • With a few exceptions, our large multi-channel apparel and home clients are reporting some strength, even while promotional levels seem flat week over week.
  • Our emerging brand clients continue to see big double-digit growth, however, noted slow-downs from a few of them likely due to broader creative and merchandising challenges.
  • As we look at the list of brands with some softness last week, we do see brands in the ever-competitive and promotional home, jewelry, and children’s categories. Clearly, Wayfair has bombarded the home market, while Etsy is also taking a big bite out of the jewelry and art categories. Bix box and online retailers continue to present challenges to smaller retail brands.

Many of you are expecting big sales this week; please keep us posted.

Overall, there wasn’t much news out last week to report on. Here are a few of the things that stood out to us.

  • Alibaba saw a 39% increase in sales on Singles Day, topping $25B in 24 hours ($2B alone in the first two hours) from shoppers across 225 countries.
  • Retailers generally reported soft Q3 results, with companies like Macy’s, Kohls, and Nordstrom continuing to post declines. JCPenney was an exception with a rare quarter of positive gains.
  • We all see Amazon dominating the news for apparel, furniture, grocery delivery, discounting, private label growth, even faster shipping…. Recently, Thomas Harman, founder of Balsam Brands, commented that Amazon “demands excellence” from retailers. This couldn’t be truer.
  • 64% of Americans (164MM people) are expected to shop Thanksgiving weekend. Black Friday is still expected to be the biggest shopping day with 115MM shoppers, and Cyber Monday comes in second at 78MM. (Source: NRF).  

PROMOTIONS UPDATE

Last week we commented on the aggressive level of promotional activity starting in late October, and the launch of Black Friday promotions on November 1st by several large retailers. The amount of email volume and levels of discounting seemed to remain flat week over week. We will continue to monitor promotions and discount activity with the expectation that offers will get more aggressive, topping out at 30% in the home category with free shipping and 40-60% off at apparel - based on last year’s data.

IN MY MAILBOX

For the same week, I had 66 pieces in my mailbox in 2015 and only 50 pieces LY as many of you tried to skirt the election. Last week, I had more than 80 pieces in my mailbox. Apparel continues to dominate the mail box, with home in second place, and noticeably lower quantities for the gift and children’s markets. The large majority of these pieces I received as a prospect. As we continue to see more and more brands leveraging direct mail and catalogs as part of their marketing mix, there were a few new stand-outs in the mail last week: Tecovas (“hand-made, high quality boots that don’t break the bank”), Tipsy Elves (check them out for the best ugly Christmas sweater collection), Parachute (rethink luxury bedding), Roark (the adventure of the road less traveled), and Lovepop (“the gift in an envelope”- amazing!). It should be noted that apparel catalogs have far fewer pages than home catalogs today as brands get stronger at telling their story and using fewer pages to drive shoppers to their site and stores.

CREATIVE HIGHLIGHTS

A big thank you to our Creative Services Directors, Renee Barrentine and Ann Martin Vitti, for sharing their insights on holiday creative trends so far. Please take a minute to look through the attached presentation.

 

Polly Wong