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Shoppers are trickling back into stores. It might not last


Now, signs of life are emerging in the apparel industry. Companies like Macy’s (M), Kohl’s (KSS), and TJX (TJX), the parent company of TJMaxx, Marshalls and HomeGoods, have said in recent weeks that sales are starting to rebound at reopened stores.

While stores’ foot traffic is still down significantly, the decline has eased. Foot traffic tumbled 97% in April compared to last year, according to Cowen. It was down 69% in the first week of June.

The encouraging developments have company executives and retail analysts asking a question: How long will the good news last?

Overall, industry sales in May are expected to climb 7% from April, according to consensus estimates from Refinitiv. The data is set to be released Tuesday. In April, sales plunged 16% from the prior month in the largest decline since 1992.
“The customer has been cooped up for the past eight weeks. Finally, she has a chance to get out,” Michael O’Sullivan, chief executive at discount department store Burlington (BURL), said last month.
A record number of retail stores are expected to permanently close this year

Still, he acknowledged it’s too soon to say consumers are fully ready to return to physical stores. “It’s difficult to know how long this pent-up demand will last,” he said.

The problem is that consumers could become less willing to make discretionary purchases on things like clothing if money tightens up.

Retail executives and analysts say the federal government’s stimulus payments and enhanced unemployment benefits — which include a $600 weekly increase for up to four months, on top of state unemployment benefits — have spurred consumer demand.

Those benefits are slated to expire at the end of July. Retailers’ recoveries may stall without additional stimulus to consumers from the federal government, warned Neil Saunders, managing director at GlobalData Retail.

“If there is a second wave of the virus, this progress may be undone,” he added.

The concern has made investors uneasy. The Dow tumbled around 800 points Thursday as a rising number of US coronavirus cases unnerved Wall Street.

‘A very fluid environment’

Retailers have been cautious in their language given the uncertainty. Kohl’s CEO Michelle Gass said Tuesday that the department store chain’s more than 1,000 reopened locations are at 75% of their pre-pandemic sales.

Gass said she was “encouraged with the signs” but added that it was “still a very fluid environment.”

In one positive sign, some retailers have said customers are coming back faster than expected.

For instance, Macy’s had expected sales at reopened stores to return to about 20% of pre-pandemic sales levels, but CEO Jeff Gennette said Tuesday that reopened stores are bringing in about half the sales they normally tally.

This incredibly popular store is one of the hardest to socially distance in

“Our reopened stores are performing better than anticipated,” Gennette said. Around 500 Macy’s stores that began shutting down in March have since reopened.

Teen clothing stores and discount chains are also reporting improvement.

“On average, reopened stores are achieving 95% of last year’s sales productivity,” American Eagle (AEO) chief operating officer Michael Rempell said last week. “We had expected stores to open considerably worse than that.” More than 600 American Eagle stores have reopened.

Discount stores, in particular, are benefiting from consumers hunting for bargains.

TJX CEO Ernie Herrman said for the 1,100 stores that were open on May 21 for at least a week, overall sales have been above last year’s level. Due to the large influx of customers on weekends, TJ Maxx decided to implement store reopenings on Mondays instead of its original plan of reopening stores on Saturdays.

May’s jobs numbers were also welcome news: the unemployment rate fell to 13.3% as employers added 2.5 million jobs. But the job market remains far weaker than it was pre-pandemic.
And analysts caution that positive sales trends may be fleeting as retailers recover from the massive blow they saw earlier this year. Retailers are also expected to close as many as 25,000 stores permanently this year, a new record.

“The recovery is fragile,” GlobalData’s Saunders said. “There are some signs that this is a temporary blip that starts to fade after stores have been open for a few weeks. In other words, it’s latent demand from the lockdown period.”



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Black Friday shoppers stay away from stores, make $7 billion-plus splurge online


WASHINGTON (Reuters) – U.S. shoppers made more purchases online on Black Friday than in the mall – hurting traffic and sales at brick-and-mortar stores, according to data that offered a glimpse into what is still one of the busiest shopping days of the year.

People walk through the King of Prussia mall, one of the largest retail malls in the U.S., on Black Friday, a day that kicks off the holiday shopping season, in King of Prussia, Pennsylvania, U.S., November 29, 2019. REUTERS/Sarah Silbiger

For the first time in several years, however, store traffic on Thanksgiving evening grew – indicating a shift in when consumers are leaving their homes to shop. It is also a sign of how Thursday evening store openings have continued to hurt what has traditionally been a day that kicked off the U.S. holiday season.

The importance on the shopping calendar of Black Friday, or the day after the U.S. Thanksgiving Day holiday, has waned in recent years. This is due to the choice by many retailers to open their stores on Thursday evening, as well as to early holiday promotions and year-round discounts. However, it is increasingly turning into a day when shoppers do not necessarily flock to stores but spend heavily online.

Also, for most retail chains, Black Friday store traffic and sales data is not necessarily grim as consumers continue to spend, consultants said. Winning the transaction, whether online or in-store, has now become more important for retailers than where it occurs.

Top brick-and-mortar retailers like Walmart Inc (WMT.N), Target Corp (TGT.N) and Best Buy (BBY.N) have continued to spend billions of dollars trying to expand their e-commerce operations to capture that growing online revenue.

Also, spending patterns over the weekend are not as indicative of the entire holiday shopping season as they were a few years ago, with purchases spread over November and December.

Online sales rose more than 19.6%, reaching $7.4 billion on Black Friday, slightly shy of estimates of $7.6 billion, according to data from Adobe Analytics, which tracks transactions at 80 of the top 100 U.S. retailers. On Thanksgiving, it estimated sales grew 14.5% to $4.2 billion.

Numbers from ShopperTrak, which is part of retail data firm Sensormatic Solutions, showed that visits to stores fell a combined 3% during Thanksgiving and Black Friday compared with the same days in 2018.

Shopper traffic on Thanksgiving evening increased by 2.3%year-over-year but was dragged down by Black Friday, which fell 6.2% from a year ago.

Brian Field, senior director of global retail consulting for ShopperTrak, said the traditional pattern of shoppers visiting stores has been disrupted not only by online shopping but by offerings like “buy online and pick up in store,” a growing category, which is not included in store traffic count on Black Friday.

“What all of this really boils down to is the customer journey has changed, now it can start anywhere online, in-store and end anywhere … and it is about making sure the customer makes the purchase and stays loyal to the brands more than where it happens,” he said.

Preliminary data from analytics firm RetailNext showed net sales at brick-and-mortar stores on Black Friday fell 1.6%, which the firm said is slower than in previous years. No data was yet available for actual spending in stores.

The National Retail Federation had forecast U.S. holiday retail sales over the two months in 2019 will increase between 3.8% and 4.2% from a year ago, for a total of $727.9 billion to $730.7 billion. That compares with an average annual increase of 3.7% over the past five years.

Reporting by Nandita Bose in Washington; Editing by Matthew Lewis



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‘Tis the season: Quotes from shoppers ahead of America’s biggest shopping day


NEW YORK (Reuters) – Stuffed with turkey after Thanksgiving feasts, shoppers headed out to stores across the United States in a quest to score the best Black Friday discounts, with early promotions marking the start of a condensed holiday shopping season.

People shop at Macy’s Herald Square during early opening for the Black Friday sales in Manhattan, New York City, U.S., November 28, 2019. REUTERS/Andrew Kelly

The following are quotations from shoppers ahead of America’s biggest shopping day.

KIMBERLY VALDEPENA, 52, SHOPPING AT WALMART (WMT.N) WITH HER DAUGHTER IN TORRANCE, CALIFORNIA:

“I like to get a little head start and see what kinds of deals are coming for Black Friday.”

SHARIDA GALLOWAY, 48, SHOPPING AT A WALMART IN CHICAGO:

“There were people here since 4 o’clock … I had to wait in line to get in… I feel bad. They should limit what people can get. People got six TVs in their car … they should have set a limit, like two per family – give everyone a chance to get things.”

PATRICIO GARCIA, 38, SHOPPING AT A TARGET (TGT.N) IN CHICAGO:

“We’ve waited for a month or so to get a new car seat.”

IVAN RODRIGUEZ, 32, SALESMAN AT A TARGET IN CHICAGO:

“Right now it’s just warming up – a lot of people are looking more for TVs and electronics so everything’s still smooth … it’ll be about the same tomorrow. I used to miss spending Thanksgiving with my family, but not as much now. I’ve done this three years.”

BRYON TOLENTINO, 33, HEAD OF THE STATIONERY DEPARTMENT AT A WALMART IN CHICAGO:

“I don’t expect that many people tomorrow … they’ll know we’ve run out of the main products with the deals like the TVs … I thought it’d be so crowded you couldn’t even walk. I haven’t heard of any fighting, any arguments.”

ROCHELLE JUDE, 18, WINDOW SHOPPING FOR STUART WEITZMAN SHOES AT MACY’S (M.N) IN NEW YORK:

“I had a Thanksgiving party yesterday, so coming out tonight is no problem.”

CINDY JONES, 59 and SCOTT MACDONALD, 60, SHOPPING AT MACY’S FLAGSHIP STORE IN NEW YORK:

“We’re traveling on vacation … looking for a real good deal.”

LAMAR MILLS, 48, SHOPPING AT MACY’S IN NEW YORK:

“My kids were in the (Macy’s) parade … We’re actually going to have Thanksgiving dinner here.”

CARA BEGLEY, 35, SHOPPING AT MACY’S IN NEW YORK:

“I’m heading back to Kentucky tonight and wanted to try to get some souvenirs and Christmas presents here.”

Reporting by Melissa Fares, Andrew Kelly and Shannon Stapleton in New York, Lisa Baertlein in Los Angeles and Richa Naidu in Chicago; Editing by Nick Zieminski



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