Posted by Bill Kirk, CEO
US RETAIL RECAP (OCTOBER 2009): Retail same-store-sales are announced tomorrow – Thursday, November 5th and the results are likely to blow away Wall Street expectations! There are many reasons but most of those are due to the coldest, wettest and snowiest October in years which very likely trumped concerns over the economy and unemployment. We have already heard from some retailers that their overall sales are 5% to 10%+ higher than they originally expected due in large part to exceptional weather and while Wall Street expects sales to be flat we’re expecting industry gains of +1% to +2.5% or better. WTI research on retail industry same-store sales show the statistically most relevant factors for stronger SSS gains in order of importance are more snow (definitely had that), colder temperatures (had that too), more rainfall (record breaking in some cases) and the least statistically significant is the consumer confidence index. Here are the top 10 factors impacting retail sales and Fall seasonal merchandise and why the news will be good on Thursday:
- 2nd coldest October in 33 years for the nation as a whole and the coldest in 7 years.
- 1,908 record low temperatures during the month driving strong Fall and Winter sales.
- The month was -2F colder than last year and every 1F colder brings a +0.7% gain in retail same-store sales just due to colder temperatures driving seasonal sales!
- Top 5 wettest October in 114 years with +85% more rainfall than last year.
- Snowiest October in at least 20 years with +126% more snow nationally than last year’s snowy October.
- Coldest Columbus Day weekend in 9 years – fantastic for Fall seasonal category sales and promotional events.
- No hurricanes to disrupt store traffic.
- Gasoline prices relatively flat to last year, only 5% higher than a year ago levels.
- Consumer Confidence Index was only 48 but that’s actually up over last year’s worst ever index of 38. While an important measure of how consumers feel about the economy, it has historically not been a good predictor of retail sales in October. It is a very significant measure from December to March.
- Retailers are up against a very easy October last year when retail same-store sales were the worst ever at -4.2% according to the International Council of Shopping Centers.
So in this case, the weather report really does belong on the financial page this Thursday! The news for November may not be as good as seasonal sales were cannibalized into late September and October. The regional summary chart below shows the weather trends across 8 U.S. regions with the Southeast having the least favorable conditions for cold seasonal merchandise.
U.S. October 2009 Summary Report
U.K. October 2009 Summary Report
G-20 UPDATE: The G-20 country showing the greatest change toward much warmer weather was the U.K. with a +1.6C warmer month than last year with 28% less rainfall. Mild and dry extends the garden season but a big negative for Autumn category sales. Russia by far showed the coldest trends with -2.8C colder conditions than LY with 53% more precipitation. The map below shows global October temperatures this October 2009 vs 2008.
