Early Q1 Update- Retail Bubble???

For the past three years, January has been a soft month for most of our clients, as the traditional sale/clearance demand in January was pulled back into December with the increase in promotional discounting. Interestingly, we are hearing January was stronger this year than in past years, even with stormy weather across the country and relatively little new product out there. This could be a positive sign of what’s to come in spring. Just last week, the Commerce Department stated that January beat economists’ forecasts. As we look ahead to the next few months, the home category is anxious to see if a new season will give a boost to the 12-18 month softness they’ve been experiencing, and for our apparel clients, it will be interesting to see if the mature brands can drive enough newness and excitement to compete with so many new and emerging brands.

The following article has given us some pause. It was written by the man who predicted the housing crisis, and who is now predicting that the retail bubble will burst. (First of all, what bubble?) He lists 39 retail stocks- and 37 are down. For anyone keeping up on the industry, it is apparent that big retail is down- especially in stores. At the same time, we have seen solid growth in specialty retail and some incredible success stories from emerging brands. Some could argue that the consumer has shifted away from these large, mature brands because she wants something new- not the same old stuff from the same old company. Last week I was with a client whose peers have literally been demolished by Amazon, and yet their business is strong and growing. We truly believe consumer demand is there (as we are seeing so far in Q1), but we all have to work harder to get it!

Here’s to a strong spring season ahead,
Polly & Your Friends at Belardi/Ostroy

P.S. We hope to see you at our conference this spring in Napa. Click here to register.

Belardi Wong