Posted by Bill Kirk, CEO
In case you haven’t noticed, retailers are doing better than Wall Street expected as of late and the weather has been one big reason – a trend that’s likely to continue this Holiday Shopping Season! In August, retail economists expected Retail Same Store Sales (SSS) to average -3.5% to -4% but they actually came in at -2% much better than expected. Why? In part the weather finally turned hot after one of the coldest June-July’s in history pushing Summer sales into August.
In September expectations were retailers would post a -2% decline in SSS but they actually came in with a strong +0.1% gain according to ICSC. Why? Many retailers commented on the exceptionally cold weather at the end of the month (coldest in decades) bringing a strong surge in Fall sales – saving the day!
So does the trend of higher than expected sales gains continue this Fall? We think YES!
October expectations are for SSS to trend flat, 0% SSS gain vs last year, but in light of the coldest weather in decades for much of the country and the snowiest start in 40+ years, 173+ years in parts of PA/NY the news could be much better than expected. The other plus is the very weak SSS results the past couple years along with higher consumer confidence. Recall that last year consumer confidence was the lowest ever at 38 in October 2008 and currently it’s at 53 this year.
November - maybe the one hiccup. With many seasonal sales pushed into September and October this year, November is in “no-mans-land”. While the cold continues early in the month (continued favorable for cold items) with potentially the snowiest in 9 years, the late month period is warm and very wet = a negative for the start of the holiday shopping season. Mild, Dry and little Snow are the most ideal conditions for store traffic and overall retail sales in November and December so we might be a little out-of-sync here. The only plus is the very easy comparisons to last year when retail sales were the worst ever, for any month, at -7.7% according to ICSC.
December, THE PERFECT SCENARIO? Maybe! After two very brutal Decembers with frigid snowy conditions both in 2007 and 2008 retailers posted abysmal SSS results of -0.7% and -4.6% respectively. With this year expected to be milder, drier and much less snowy the opportunity for stronger than expected gains in positive territory is very likely. While cold seasonal items are likely to not fare as well, higher margin gift categories and overall store traffic will. On-line sales did well in the stormy weather last year may shift back to brick and mortar retailers this year!
Here comes Santa Clause!