Late Black Friday, Shorter Holiday Season Impact November Retail Sales, According to NRF

Newman's News - 

The surprising retail sales/economic news is kinda what we all expected, excrement squared....

But most retailers are not doing themselves any favors with tired old formulas that are barely impacting and less than motivating to consumers. This year there are, of course and sadly, more 'going out of business' postings, but the sales at these stores have merchandise priced at or above web sites and other stores. Its crazy because when the liquidators roll in a few months, it's going to be marked way down. Consumers won't be shopping, they will be cutting debt.... NOW is the time!

Late Black Friday, Shorter Holiday Season Impact 

November Retail Sales, According to NRF

Washington December 12, 2008 – While shoppers were out and about Black Friday weekend, they kept their pennies to themselves the rest of the month with November retail sales showing continued consumer restraint. According to the National Retail Federation, retail industry sales for November (which exclude automobiles, gas stations, and restaurants) increased 0.6 percent seasonally adjusted from October and decreased 2.0 percent unadjusted year-over-year. Industry related month-to-month sales saw the first increase in four months.

November retail sales released today by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations, and restaurants) decreased 9.0 percent unadjusted over last year and dropped 1.8 percent seasonally adjusted from October. 

Thanksgiving came too late in the month for retailers to see strong November sales,” said NRF Chief Economist Rosalind Wells. “With five fewer days between Thanksgiving and Christmas this year, the holiday season will come down to December’s performance.”

Sales were down across most retail categories; however, some sectors saw slight increases in month-to-month sales. Electronics and appliance stores sales increased 2.8 percent seasonally adjusted from October but decreased 5.4 percent unadjusted year-over-year. Clothing and clothing accessories stores sales increased 0.8 percent from the previous month but fell 7.4 percent from November 2007. NRF continues to forecast meager holiday sales growth of 2.2 percent and defines the holiday season as retail industry sales in November and December.

The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees - about one in five American workers - and 2007 sales of $4.5 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com

Is Retail Dead?

I’m sitting here in LA on the morning of Black Friday (I guess my alarm clock didn’t go off at 4a.m. so I could canvas the scene and see for myself that this would be a mild shopping season) and thinking big things: When will the economy turnaround? When will we have no direct US involvement in war and see an overall decline in senseless acts of aggression? Is Retail Dead?

Ok, not sure about the first two, but the answer to #3 is "NO" – sorry for the drama, we need the ratings to drive ad revenues so it was suggested we puff up our headlines and leads.

Seriously, this is a real topic and a question everyone who relies on retail (starting with several thousand brand marketers) has or must ask themselves today and everyday. It really shook me when I rolled up to a Circuit City store and it had "Liquidation Sale: Everything Must Go" signs covering the windows. Then as I started and reflected at the signs I realized that just a few months ago this was a CompUSA store and a year or so ago it was a Good Guys store. Unbelievable I thought. But is it?

Retail is like any business, if you fail to innovate, keep pace with customers, provide unique value and running an efficient operation, you are road kill. And, when the economy tightens (a bit of an understatement given the events of the last few months) it truly tests the mettle of all operators to balance efficiency, value and innovation. But while those 3 operations hit the skids, chains like the Apple store, Amazon and Fry’s continue to pack people into their stores, grow and evolve.

So now you’re a vendor and looking to find the right partnership. Pick partners where you can meet your goals. Increase awareness, drive trial product experience, usage or just drive sales. (I know, how boring). Listen, retail is not just about sales, but it is about achieving goals and objectives, along with an acceptable ROI. Don’t lose site of that and you will find successful sales partners.

Ok, so what do you do? Who do you sign up to carry your product? Remember when you used to build a computer or software product and tried to sign everyone up to carry up – J&R to BJ’s, Walgreen’s to OfficeMax, MicroCenter to eBay. Today, that’s not so popular, or smart. But before deciding you need to consider the options:
Selective distribution or Exclusive distribution – Pick one partner or a few partners. Apple+BestBuy, Dell and Costco. The 3 sisters of the Office product variety, there are many options.
Alternative distribution – VAR’s, Awareness Channels that provide huge exposure, or funky places that can meet a variety of goals (i.e. Radio Shack, eBay, or a Company that I recently tapped to help a client build a web stores for its brand.

Yea, it’s crazy out there. Its tricky too but there is a strategy for you.

Circuit City - What Went Wrong?

Four letters. D-I-V-X. For some crazy reason, back in 1997, Circuit City dreamt up the idea of becoming a hardware vendor and developed a pay-per-view scheme for watching movies on your DVD player. Officially launched in 1998, the Divx enhanced DVD players attempted to grab an additional $50-$100 over standard DVD players. Movies were as low as $4.49 for a 48-hour viewing period, after which the consumer had to reactivate their viewing period for additional hours. I will spare you the details, but needless to say it FALIED! Miserably. It wound up costing Circuit City over $100M and a major distraction that they never bounced back from.

Now, I never really liked Circuit City. The road to Richmond is littered with wasted co-op dollars and Waffle Houses. Their stores were a relatively boring place to shop at. Although they moved volume, at times, they took their eye off of the ball and allowed Best Buy to completely out execute them. They never took the Avis approach of 'let's try harder'. Instead, they played hardball with vendors and did the most sterile marketing and promotion one could imagine.

So now what? Will the Mexican tycoon Ricardo Salinas Pilego, who grabbed 47M shares at a deep discount, save this ailing retailer and bring them back out of Chapter 11? Hopefully, he’ll do better than Carlos Slim did with his CompUSA purchase. Or, will someone like Frys grab some key locations and expand their market share. We will have to wait and see. In the meantime, the celebration in Minneapolis continues as Best Buy reaffirms their position of power.

Thoughts? Comments? Concerns?