RetailSails

Mother nature was not kind to retailers last week, as severe winter weather kept shoppers out of the stores and lean inventories held back sales of winter gear early in the week. While demand picked up over the weekend heading into Valentine’s and President’s Day, bargain-hunting shoppers continue to reign and retailers are struggling to wean them off the deep discounts they have become accustomed to.

The International Council of Shopping Centers (ICSC) reported that chain store sales declined 0.7% from a year ago for the week ending Feb 13th, while sales dropped 1.6% on a week-over-week basis. This was the first YoY decline since early September. Shoppers were held back by cold temperatures and severe snowstorms across the country, as 49 of the 50 states had snow on the ground last week.

“A severe blizzard dumped another heavy accumulation of snow in the East at midweek followed by a record-breaking snowstorm in the South from Dallas to Atlanta which hindered consumers’ ability to shop,” said Mike Niemira, ICSC’s chief economist. “However, storm-induced pent-up demand is likely to be unleashed during the upcoming current week.” ICSC Research expects comparable store sales to increase about 2% in February after a 3% gain in January.

Redbook Research said that same-store sales rose 1.8% for the 2nd week of February compared to last year, while month-over-month sales increased 1.6% relative to January. Record breaking snowstorms held back traffic and forced many stores to close, which dampened prospects for retailers counting on a robust Saturday leading into Valentine’s Day.

Discount stores fared well as consumers snapped up necessities such as snow shovels, firewood, salt and bottled water, but department stores couldn’t satisfy shopper demand for winter gear, according to Catlin Levis, Redbook analyst. “At department stores, shoppers were searching for limited selection of cold weather merchandise since retailers already cleared out winter goods due to lean inventories. Some retailers who are fully stocked in spring merchandise will continue to miss out on the opportunity to sell cold weather merchandise.”

ShopperTrak reported that sales at U.S retailers declined 2.4% for the week ending Feb 13th compared to a year ago, while sales rose 8.8% on a week-over-week basis. Snowstorms across the country held back sales early in the week, but demand picked up over the weekend as shoppers snapped up Valentine’s and President’s Day promotional items.

“After analyzing our historical data we’ve determined during the Valentine’s Day blizzard in the Northeast in 2007 shoppers actually visited various retail locations just after the holiday when they were able to safely leave their homes,” said Bill Martin, co-founder of ShopperTrak.

“And in 2007 – just like last week – we saw a large weekend spend which helped push weekly retail sales into the black.” Martin continued: “So it seems although Mother Nature was unkind, when provided with holiday promotions and a reason to spend the U.S. consumer has proved very resilient.”

Even with the recent weather disruptions, retailers are no doubt breathing a sigh of relief as we have returned to a more normal and predictable spending environment. However, after a relatively strong holiday season, recent weakness in consumer spending and confidence surveys show these gains could be short-lived:

• According to the February Consumer Reports Index, shoppers cut their planned spending for February to the lowest level since August. “Although consumers spent more than they planned to this past holiday season, they’ve buttoned up their wallets and aren’t planning to open them up anytime soon, according to the February Consumer Reports Index,” the company said in a statement.
• The Deloitte Consumer Spending Index ticked down in January for the 2nd month in a row, mainly due to a slowdown in real wage growth. “Many retailers have experienced a profound shift in their customer base and are competing on a new playing field where a vigilant consumer has emerged,” said Stacy Janiak, vice chairman and Deloitte’s U.S. Retail leader.
• The preliminary February reading of the Reuters/University of Michigan Index of Consumer Sentiment showed a drop from January as high unemployment is expected to continue and with most consumers looking for no gain in income or home values in the year ahead. “The cumulative financial strain during the past few years, coupled with the fact that the majority still expect no gains in their incomes, work hours or home values in the year ahead, has meant that consumers have remained extremely cautious spenders,” Richard Curtin, director of the surveys, said in a statement.