Holiday 2015 Debrief: Stores Finish Year With Strong Holiday Performance

Shelley E. Kohan
Shelley E. Kohan
Vice President of Retail Consulting

The RetailNext Retail Performance Pulse is out, and it shows that brick-and-mortar retail finished Holiday 2015 strongly, and it leads to a cautiously optimistic outlook for the New Year – but only if retailers continue to redefine their business around today’s shoppers and their new shopping journeys.

Physical retail had stronger performance in December than the proceeding months across every key performance indicator, including traffic, sales, conversion and sales per shopper. Sales for the month were down 0.4 percent year over year, and substantially improved from the pervious months’ declines that ranged between 5-12 percent. Additionally, conversion was up 0.4 percent, and sales per shopper up a resounding 5.7 percent!

December '15 store metrics - table

December’s performance did not come as a tremendous surprise as physical retail began to show signs of improvement in early November. However, the real news – and something that was somewhat of a surprise – was the minimal sales drop.

Retailers worked very hard in 2015 to make noticeable changes in the store environment, including integrating enabling technologies, solving shopper pain points, and better training sales associates at the front lines on the selling floor.

Shoppers are shopping with a higher intent and commitment to purchasing, and spending more per transaction. Plus, with more product research prior to purchase, returns are lessening over time. When financials are reported later, hopefully retailers will benefit from higher average transaction values with better margins than last year – except apparel markets, where seasonal goods took a bit of bath due to unseasonable weather.

The last two weeks of December were the strongest weeks for brick-and-mortar, where strong conversion and sales per shopper resulted in sales increases of 10.8 percent and 6.7 percent respectfully. It was the second consecutive year that Holiday ended with strong numbers, and it signals the changing role of the store, particularly in the eyes of the shopper.

December '15 store results - calendar

Regional performance showed that the “coasts” surpassed the Midwest and South regions (and, yes, I do recognize there are coasts in the South). The Northeast brought in a 2.7 percent increase in sales and a 10 percent lift in sales per shopper, while the West delivered a 3 percent sales increase with a 5.7 percent increase in sales per shopper.

December '15 store results by region

For the combined November-December Holiday shopping season, stores showed a 2 percent drop in sales for physical retail, but figure, of course, does not include the digital side of the business. Traffic was down 6.4 percent, but conversion and sales per shopper were up 0.3 percent and 4.8 percent respectively.

The top days for the Holiday period were not a big surprise but, but the order in which they fell might be. This year marked the first time in many years where the top traffic day was not Black Friday. In fact, Black Friday was only the second busiest day for store traffic (behind Saturday, December 19) and just the third best day in sales (behind Wednesday, December 23) – although to be fair, Thanksgiving and Black Friday combined still ranks substantially higher then other days.

Retail has experienced the growing trend of shopping seasons extending across more and more days, starting earlier and ending later, as shoppers lack the sense of urgency around any industry-dictated time frame. Simply, retail is on the clock of the shopper these days … when she wants, where she wants and how she wants.

Rankings for Holiday 2015 on traffic were Saturday, December 19 before Christmas, Black Friday and then Wednesday, December 23. Top sales days were December 23, December 19 and Black Friday.

For the complete RetailNext Retail Performance Pulse detailing Holiday 2015 store results, download your free copy today.

No Crystal Ball here, but …

Looking forward and towards Holiday 2016, the effect of the Leap Year is the pushing of Christmas all the way to Sunday, which I believe is a positive for retailers. Hanukkah and Christmas will overlap, which may delay some sales from early-December to later in the month in some markets.

Shopping days increase from 28 to 30, and shoppers will be coming off a presidential election in the U.S., the effects of which can go either way for consumer confidence, and with consumers typically much more conservative with spending when dealing with major changes in government leadership and political direction.

The good news is that retailers will be far more advanced with analytics, enabling them to deliver a higher level of relevancy to their shoppers. Mobile payments will be more widely deployed, and that will cultivate a higher spend per shopper based on ease and convenience, and the blended digital and physical retail channels will thrive when all channels synchronize efforts and strategies.

Moving into 2016 and setting up for 2020:

A key element to the reinvention of physical retail is understanding the target market’s adoption rate of technologies to best execute in-store experiences that deliver relevancy. The product-plus factor is moving beyond trading dollar for product and giving the customer a deeper connection through community or brand engagement. Retailers must transform the “physicality” of the shopping experience and brand the in-store experience to best match the goals of the shopper. This may require putting intuition on a shelf and being open to accepting new insights about the target customer we think we know.

While my complete list of 2016 trends has not been announced yet, I’ve previously introduced three that will undoubtedly be included:

  • Value-driven dominance: Value does not necessarily mean low price or even cheap. Value in terms of retail is the “perception of a deliverable being greater than the price paid for the deliverable.” For instance, TJX has great value but, at the same time, so does Hermés. Value is, of course, in the eye of the beholder. Today, value is also measured in time. In this case, the deliverable is available in the quantity, format and time that there is a need for the deliverable. Retailers that can expedite shopping for those in “great need” are creating great value while at the same time, retailers that expose shoppers to an environment that allows for high engagement are also offering great value.
  • Experiential shopping initiatives: The ability to add the “plus” to a product with some type of experience or interaction. Customization allows for product and interaction to merge, resulting in high shopper engagement. The same goes with community ecosystems that provide another level to the product purchase. As the brand ethos is embedded in the product, the customer becomes the brand manager.
  • Service-centered focus: Processes, infrastructures and systems live behind the scenes and produce painless and frictionless shopping, which shoppers may not see or hear, but nonetheless experience with pleasure. Expedited checkout, “click-and-collect” and curbside pick-up are three examples. Mobile wallet is another great example, and retailers are working hard to deploy this in a smart way. Product search and price look-up apps are other programs implemented to make shopping convenient.

And, finally …

The last tidbit of advice is to make sure strategies being developed, capitalized or expensed and executed are the ones that shoppers or customers value most, even if they don’t consciously know they value it yet. Often times, we Retail Warriors lag behind our customers and remain focused on rolling out initiatives that may not be high value-add from a customer perspective or are potentially outdated by the time we have our legacy systems integrated. A 2016 goal for all of retail should be: “Let’s get in front of the shopper, then surprise and delight her.”

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