Winter weather wreaked havoc across much of the United States in February, and its impact was certainly felt at retail stores, where sales decreased 10.4 percent year-over-year on a decline of 12.5 percent in store traffic. That’s certainly bad news.
But, every snow cloud has a silver lining.
The good news is that in-store consumer leading metrics around individual shopping trips was positive for the month of February. Sales per Shopper (SpS) was up 2.8 percent, driven by increases in both conversion and Average Transaction Value (ATV).
Retail Results for February 2015 from RetailNext on Vimeo.
The interesting factor is that while traffic declines were most severe in the Northeast and South regions as a result of inclement weather for most of the month, it was in those regions where SpS was the highest. Here’s my theory why: Consumers were “held captive by the snow” and unable to get out to the stores on a more frequent basis, but when they did make it out, they had a mindset to purchase.
No one is going out in a blizzard to window shop, right?
SpS was up over 5 percent in both the Northeast and South regions. In fact, these regions were firing on all cylinders and hit the store operations trifecta of increases in conversion, ATV and SPS. Customers had the time and technology to easily research products and pricing online, and by the time they got to the store, they knew what they wanted. This type of shopping behavior highlights the importance of retailers to allow and empower the convergence of their digital and physical channels.
A perfect storm
February started out with a pair of unconnected events that, when brought together, turned into a bad recipe for brick-and-mortar retailers. First came the Super Bowl, with a great match-up that turned into a great game, giving viewers little reason to get off couches. Then, after layering on a Super Storm Monday on the heels of Super Sunday, retail results suffered, and the metrics for the first week of February were the absolute lowest of the month.
February showed the most difficult traffic declines in the beginning and end of the month. The difference between the two was the variance in SpS, which was significantly higher at the end of the month. The most challenging week was the second week, when the weather impacted physical retailers quite heavily, and all sales levers – SpS, conversion and ATV – were significantly down.
The message for retailers
In order for physical retailers to recoup the drop in February sales related to traffic declines, they need a two-pronged approach for future growth of their brands. Since 89 percent of retail sales occur in the brick-and-mortar format (excluding motor vehicles, food services, travel), diverting more traffic to digital channels alone cannot fund a 12.5 percent decrease in store traffic.
To drive comp sales growth, retailers need to:
- get more out of their existing shopping base that is visiting stores (higher conversion and SpS), and
- drive the physical retail shopper to the brand’s digital channels, continuing the dialogue – and conversion – well beyond the store’s four walls
And, of course, as it could go without saying, retailers need to continue their aggressive acquisition of new customers across all digital and physical channels.
Is it spring yet?
Follow the #retail and #backtothestores conversations on Twitter with @retailshelley and @RetailNext, as well as at www.facebook.com/retailnext.
Feature photo image credit to Frank DiBona/Flickr “kiddocone”