November 23, 2016

SALES UPDATE
After a very soft start to the season, 80% of you are now reporting that sales last week were up to LY, from single to double digits. Adobe Digital Insights reported that retailers lost nearly $1 billion worth of online sales in the first 14 days of November, with the biggest drop happening the day after the election, when sales growth trickled to 1.3% compared to the expected 7.8% surge. This post-election plunge Adobe reported was the slowest growth for U.S. retail sales since 2012. In a recent survey, the NRF reported that over 40% of consumers have yet to start their holiday shopping. As we approach our peak season, here are a few highlights to note:
· Mobile devices will surpass desktops in digital shopping visits this holiday season, vaulting ahead by a margin of 53% to 47%, according to Adobe’s 2016 Digital Insights Shopping Predictions report.

· Americans plan to spend $426 on gifts during the 2016 holiday shopping season, down from $487 a year ago, and there will be little difference in the number and types of gifts on shopping lists this time around, according to Deloitte’s 31st annual holiday survey of consumer spending intentions and trends.

· Clothing and accessories remain the most popular gifts this year, given by 61 percent of shoppers; 56 percent will give gift cards. Nearly half of shoppers, 44 percent, will give books, CDs, DVDs, videos or video games; 42 percent will give toys, 31 percent food or candy and 30 percent will give electronics. (NRF Holiday report)

· For physical stores, the top 5 busiest shopping days will be: “Super Saturday,” Dec. 17 (Saturday before Christmas), Black Friday, Nov. 25, Friday, Dec. 23, Saturday, Dec. 10, and Monday, Dec. 26. Here are the top least busy days, in terms of shoppers visiting stores: Tuesday, Nov. 29, Cyber Monday, Nov. 28, Wednesday, Nov. 30, Thursday, Dec. 1, and Monday, Dec. 5.
PROMOTIONS UPDATE
WalletHub reported that 1 in 10 retailers are recycling the same promotions from last year this year. Many retailers have been referencing Black Friday promotions for 3 weeks now, and as expected, Monday’s emails featured headlines like, “Black Friday STARTS NOW” and “Black Friday Doorbusters NOW.” We are hard pressed to find examples of retailers who are not promotional right now; our decoy tracking last year reported that over 90% of all catalogs had promotional offers. This includes premium brands far and wide. We continue to see hybrid offers like we saw last year. Apparel is north of 40% off already, and the home category is pushing into unchartered waters with 30% discounts as they try to make up for a soft year. Lastly, if you are not sending 9-14 emails per week, then you are an exception.

IN MY MAILBOX
Last week I had a record 116 pieces in my mailbox, compared to 75 last year. While this was in part due to mailers avoiding election week, we also saw a good amount of mail election week, as well. This growth is coming from online retailers launching into direct marketing and wholesale brands leveraging catalogs to help grow their direct to consumer business. By category, I received:
· Apparel – 38

· Gift – 24

· Misc – 24

· Home – 17

· Children’s – 13

Some of the new and/or interesting catalogs included a new catalog/magazine by Kid Made Modern, Society 6 (new catalog), Jeni’s Ice Cream in the food/gift space, Anthropologie (mailing more frequently to me than ever before), Coyuchi (new in my mailbox), and a lot of wine and food guides (which makes a lot of sense for those of you that know me well!).

Lastly, please be on the lookout for our Save the Date for our spring event in Napa on May 4th and 5th this year. We hope to see you all there!

As always, we hope this email finds you well and that you have a wonderful Thanksgiving.
Polly & Your Friends at Belardi/Ostroy

Novembre 15, 2016

SALES UPDATE
Our best estimate is that the election negatively impacted sales 10-15% in the two weeks prior to November 8th. Post-election, many of our clients reported declines of 10-30% on 11/8 and 11/9, but results through the weekend have been too mixed to make a general conclusion. We are seeing clear differences in results based on the brand’s target consumer and the life stage of the brand (new brands vs. mature brands).
· Double digit growth last week- Strong growth was limited last week exclusively to emerging brand clients still seeing spikes from new emails, new catalogs, and new promotions.

· Single digit growth- We are seeing modest growth for our low to mid ticket apparel and footwear clients targeting older, traditional consumers living mostly in the middle of the country.

· Single to double digit declines to LY- This is what approx. 65% of our client base is reporting, from multi-channel retailers to premium brand clients, and it includes all product categories. We did hear that sales began to pick up over the weekend but not enough to make up for the earlier shortfall.

Hopefully we continue to see sales pick up as we head into Thanksgiving week. Industry experts have commented that half the population may be celebrating while the other half is seeking retail therapy- a positive outcome for sales in any event.

A few additional notes
· The RetailNext Retail Performance Pulse report for brick-and-mortar store performance in the month of October (October 2 through October 29 on the retail industry’s 4-5-4 calendar) shows a monthly drop in sales of 8 percent year-over-year on an 8.5 percent decline in store traffic.

· The growth of off-price retailers is not slowing down. In August, Moody’s Investors Service forecasted the off-price sector’s annual revenue to rise 6 to 8 percent during the next five years, outpacing the overall growth of other apparel retailers.

· Regardless of category, it is rare to see brands with repeat rates north of 35%. Consider this: about 30% of Amazon Prime members (approx. 63MM) said they place orders weekly and 81% shop monthly.

· Google, Yahoo, and Facebook still top Amazon’s 185MM unique monthly visitors (Google tops the list at 245MM monthly visitors). Source: comScore.

· UPS is forecasting that its deliveries will rise nearly 17% from Thanksgiving through New Year’s, compared with the same period in 2015.

· 88% of consumers say that they won’t pay a dime for expedited shipping (Deloitte survey).

· Private label credit cards are more popular than ever. As of Q3 2016, the number of consumers with retail cards grew to 125.3 million and will likely grow substantially during this year’s holiday season. (TransUnion report.)

· The fastest growing categories online are food & drug, hardware/home improvement, and housewares/home furnishings (Internet Retailer).

· Mobile retail sales have increased 25% year over year, and mobile accounts for 70% of time consumers spent on a retailer’s site, and 20% of sales (comScore).
PROMOTIONS UPDATE
Here are the major trends we are seeing right now.
· Go big or go home- The apparel category is pushing 30% plus discounts in the form of either coupon codes or markdowns AND free shipping, and the home category has gone as high as 25% off and free shipping, which is a category usually less aggressive because of margins. We see promotions across all price points, including luxury brands.

· Go early- Amazon launched their Black Friday deals on November 1st, along with Walmart, Toys R Us, Costco, and Target.

· Go often- Last week we touched on the number of retailers sending emails twice daily and the list keeps growing.

· Exclusive items with great pricing- Amazon has called out they will have new deals every five minutes. Walmart is offering 400 exclusive toy items. Target is offering 1,800 new or exclusive toys, about 15 percent more than last year. While we understand that Amazon, Target, and Walmart are very different from all of you as retailers, the point is that they are setting a new foundation of shopping expectations for your customers.

More to come in this category as email statistics and discounting levels are published.

IN MY MAILBOX
As expected there was a 32% decrease in mail volumes last week as many of you tried to skirt being in home right during the election. For the same week last year, I had 66 pieces in my mailbox vs. 50 this year. Interestingly, I had over 50 pieces just in my box yesterday so this week is likely to set a new record. Apparel continues to dominate the mail box, with home in second place, and noticeably lower quantities for the gift and children’s markets. The large majority of these pieces I received as a prospect. We also continue to see a more conservative approach to promotions in catalogs versus what is on the web. We like to challenge this position at this time of year, as the catalog is the most expensive marketing vehicle for many of you, and it is a missed opportunity to not call out offers available online, especially to prospects who are not likely getting your emails or Facebook posts.

One last note: We are often inspired by the great stories, passion, and commitment we see from our clients. Many of you know, we are huge fans of Tea Collection because of their vision, leadership, and business success. To that end, we wanted to share with you the message they sent out last Wednesday (attached to this email).

Here’s to a great couple of weeks still to come!
Polly & Your Friends at Belardi/Ostroy

 

November 7, 2016

SALES UPDATE
Despite a few promising weeks in October spurred by either weather or friends and family events, it seems retail sales are off to a slow start for the holiday season. Hardest hit are the large apparel and home brands while smaller emerging brands continue to see significant increases in sales. We monitor active buyer file counts for more than 300 brands, and two-thirds are showing decreases in their 12-month buyer file compared to last year after so many hit or miss months. To add to a soft start to the holidays, consumer confidence hit a two year low in October. We expect sales to pick up just before Thanksgiving as the election has pushed out the start of a season already shorter than ever. Here are a few additional call-outs:

· After strong growth the last few years, the men’s apparel category has been hard hit this fall.

· Traditional home brands continue to struggle, and you have to consider Wayfair’s impact. With over $2B in annual sales, our own back of the napkin estimate is that they could be looking at 6MM active buyers.

· House circulation in most cases has been the big driver of sales, while prospecting has been much weaker across all categories. Most companies continue to report that customer acquisition is one of their biggest challenges.

· The children’s market continues to hold up nicely (apparel and home décor/furniture) while other markets struggle.

· The traditional food/gift brands continue to experience softness as the gifting landscape shifts towards new trends in both technology and personalization.

· Demographic markets seem to be reacting differently right now. Baby boomers and seniors have pulled back on their spending and most brands selling directly to this audience are experiencing soft or mixed results. The strongest market right now appears to be the middle to upper income, 35-55 demographic.

· It is also important to note that US luxury retail sales have dipped 3% in the past year.

· Amazon continues to dominate. Amazon finished Q3 up 30%- double the rate of growth for ecommerce overall and 10X the rate of total retail sales. Sales from third party product also hit a record for Amazon in Q3 at 50% of total sales.

· With all of the promotional activity, formerly key selling days like Black Friday are losing their impact.

· A note about sales curves: For the last two years in a row, 9 of the 10 top online selling days were in December. In other words, still plenty of time to drive demand!
PROMOTIONS UPDATE
Just when we thought the promotional landscape could not be more aggressive, we have been surprised at the level of discounting starting in late October. Here are a few of the steep promotions we found in our inboxes and on Facebook (note: catalogs continue to be more conservative with 15-20% off discounts).
· Ann Taylor- 50% off “almost everything”

· Banana Republic- 50% off any five items

· Boden- 25% off plus free shipping and returns

· Chasing Fireflies- 20-30% off depending on basket amount

· Cole Haan- Extra 40% off sale styles

· The Children’s Place- 40-60% off entire store

· Gymboree- 60% off fall favorites

· Lands’ End- 50% off your order

· Seven For All Mankind- 40% off your purchase

· Talbots- 30% off everything

· Williams-Sonoma- 25% off your order plus free shipping
We are no longer monitoring weekly email frequency as part of this report given the huge amounts of email volume. Instead, we are looking at brands sending multiple emails in the same day. This list includes: Banana Republic, Bed, Bath and Beyond, Eddie Bauer, Gap, Garnet Hill, Hanna Andersson, Lands’ End, Nordstrom, Pier 1, Pottery Barn, and Talbots.

IN MY MAILBOX
Last year I had 54 catalogs and direct mail pieces in my mailbox the first week of November. Excluding election materials, this year I had 75 (+39% to LY). This mirrors the growth we have seen all year, as the number of online retailers and wholesale brands focused on leveraging DM for both retention and acquisition continues to surge. As noted above, we are seeing new catalogs targeting the affluent 35-55 market do very well. Our research from last year found that 80% of all catalogs go to women over 55, so this younger demographic is also less saturated in the mail. Here are a few call-outs:

· Absolutely love the brand story in the latest Vineyard Vines catalog (we will have full creative highlights from our Creative Services team in a few weeks).

· Cashmere everywhere. Catalogs featuring cashmere (just in my mailbox last week): Garnet Hill, J Crew, Mint Velvet, Pure Collection, The White Company, Wrap… I live in CA. It is 70 degrees today.

· Only two first-time catalogs: Terlato Kitchen (Italian food gifts) and Warby Parker (eyeglasses)

· Format trends: smaller page counts, smaller trim sizes, and matte paper. The percent of non-standard catalogs is much higher than in years past as many brands are finding success in smaller formats (hint: smaller formats work for younger consumers who just need to be inspired and get a call to action).

· Best gift catalogs so far: Olive & Cocoa and Uncommon Goods.

Again, we hope you find this update helpful, and we hope you have a terrific holiday season (personally + professionally),
Polly & Your Friends at Belardi/Ostroy

January 6, 2016

SALES UPDATE
In large part we are hearing that the first few weeks of November were soft, followed by a strong Thanksgiving week and Cyber weekend, and then sales lagged in early December before picking up in the final home stretch. We are hearing from half of you that the holiday season finished up to LY (from “good” to “great”). Despite the strength in ecommerce, our multi-channel retail clients fared better overall than DTC only, though there were a few exceptions for companies firing on all cylinders. Here are some of the major trends we are seeing:
· According to our client base, the 40- to 60-something women’s apparel market seems to be having a resurgence, and this is supported by MasterCard’s report that apparel sales saw high single-digit growth during the season, despite the unseasonably warm weather.

· Ecommerce growth has hovered around 15% for the last several years, but some reports are indicating ecommerce saw as much as 20% growth this year (though still less than 10% of total retail sales).

· There was more web traffic on Thanksgiving Day than Black Friday or Cyber Monday, according to Experian Hitwise data. Amazon took 34% of these visits, followed by Walmart at 6% and Target at 3%. Search engines continued to be the largest source of traffic by far with 45% of all web visits starting there, compared to email and social marketing tied for second with less than 10% each. (Experian Hitwise)

· For the Hitwise Retail 500, 53% of all traffic came from desktops vs. 47% on mobile.

· Out of this year’s estimated $94 billion growth in 2015 retail sales, Amazon’s share was $22 billion, or 23%. Amazon now has “tens of millions” of Prime members and Prime Now is in over 20 markets (Retail Dive, 1.4.16).

· As peak shopping days keep moving later, there has been speculation that consumers are just waiting for the best promotions, however, The NRF is reporting that 44.8% of people are still just deciding what to buy as of mid-December and only 22% are waiting for the best deals.

PROMOTIONS UPDATE
Overall, the season was as promotional as we expected. Whereas catalogers in the past have saved the most aggressive promotions for the web, many of you were now more promotional in print having recognized that not matching what you were doing online was a missed opportunity. Many of you are targeting a more affluent consumer, and we would like to remind you of some of our research from earlier this year that found that affluent consumers post-recession have more middle-class spending values, and they are more value-sensitive than price-point sensitive. Said another way: the late Chuck Williams once told me, “How do you sell a $200 toaster? You put a $400 toaster next to it.”
· Here are some of the average discounts seen for major retailers: Macy’s (51.7%), Amazon (41.6%), Target (31.4%), Toys R Us (30.3%), Sports Authority (28.0%), and Gap (25.6%). (Wallethub)

· Here are the average discounts by category: Jewelry (56%), Apparel & Accessories (46%), Furniture (37%), and Toys (33%). (Wallethub)

· Continuing last year’s new trend, 49% of online retailers surveyed now offer “free returns” where the store pays the return shipping, according to the NRF. Some of them include: Macy’s, Target, Saks, Gap, Bloomingdale’s, Old Navy, and Amazon (certain “fashion” items only). (Retail Dive, 1.4.16)

· What’s bigger than free shipping and free returns? Same day shipping, for everything from groceries to meals to Target and Costco. There are few stats out on this but keep an eye out for it.

· According to Experian Marketing Services, the Tuesday after Cyber Monday had by far the most unique opens and unique clicks in email compared to all the days before it, and 90% of all retail emails in December had some form of offer.

· Much like email, 88% of text messages included an offer. (Experian 1/2/16)

· 59% of baby boomers and 69% of Generation Xers say they would be happy to switch brands to receive a discount, Ipsos and Excentus report.

CATALOG UPDATE
2015 was a great year for direct marketing. Just at Belardi/Ostroy, we launched 23 wholesale brands, online retailers, and emerging brands into the direct mail space. We saw big increases in direct mail this holiday season driven by increased prospecting, additional housefile contacts, and new companies in the mail. Here are some of the highlights of the season:
· We saw major shifts with in-home dates as November week 2 was the biggest volume week (compared to Nov week 1 LY), and the second peak week was December week 1 as more companies tried to leverage their DM budgets closer to peak spending days. November weeks 3 and 4, however, held up too with big increases in volume over last year.

· The men’s category continues to be hot with more than 20 unique catalogs in home this holiday, including traditional men’s catalogs like Charles Tyrwhitt, Allen Edmonds, J Peterman, Bobby Jones, Patrick James, Filson’s, and Paul Frederick, as well as emerging brands like Huckberry, Guideboat, J.L. Powell, Johnnie-O, Bonobos, The Field, Carbon 2 Cobalt, 32Bar Blues, Cooper Jones Supply, QOR, and Trumaker.

· We also continue to see more catalogs successfully targeting the 30- to 40-something affluent consumer- that younger audience sought after by more traditional catalogers. Mailers in this category include some of the men’s brands listed above as well as companies like Sole Society, Marine Layer, American Giant, Eloquill, Lucky Brand, Zappos, Everlane, Le Tote, and Frank & Eileen.

· Some of our favorite catalogs this season included Guideboat, Talbots, WestElm, Olive & Cocoa, Boden, Sundance, Nordstrom, Filson’s, and Mark & Graham.

As we look to the 2016 holiday season, some of our major considerations should be: promotional levels, mobile capabilities, Amazon, shipping speed, shifts in peak spending days, audience integration between DM and digital, alternatives to email, and ultimately, how to best compete and stand out in a saturated market.

Lastly, we are focused on bringing you our best client event yet this spring, and we hope to see you there. Our speaker roster this year includes Stephen Gordon (Founder, Restoration Hardware and Guideboat), Angela Caltagirone (SVP Digital Marketing, Williams-Sonoma Inc.), Steve Moore (Brentwood Associates), Paul Lazorisak (VP Database Marketing & CRM, Talbots), and Allen Nance (entrepreneur and innovator). We’d love to see you there. http://belardiostroy.com/belardiostroyevents/

As always, we value you as a client, and please don’t hesitate to let us know if there is anything we can help you with.
Here’s to a terrific 2016!
Your Friends at Belardi/Ostroy

December 9, 2015

SALES UPDATE
We are happy to report that the large majority of you (more than 100 retailers and catalogers) are seeing strong sales growth over last year as we head into the height of the holiday shopping season. I’m sure many of you have read that Thanksgiving day surpassed Cyber Monday as the top online shopping day overall, however Experian is reporting that apparel retailers continued to see Cyber Monday as their biggest day, along with Walmart. It is interesting to note that many of you reported that ecommerce sales were strong while stores were soft (whether you have 7 stores or 70 stores). Supporting the shift away from stores to ecommerce, the Hitwise Retail 500 saw a 44% increase in web visits on Black Friday vs. last year (vs. declines in store traffic).

Here is how online sales finished out for Black Friday (Source: Tech Crunch 12/1/15). Amazon dominated online Black Friday sales, accounting for 35.7 percent in e-commerce spending on November 27. A distant second, Best Buy brought in 8.23 percent of total online revenue, followed by Macy’s at 3.38 percent, Walmart at 3.35 percent and Nordstrom at 3.11 percent.

A few interesting data points from Experian released last week:
· Catalogers have sent 41% more emails this year than last year (+28.8% for multi-channel retailers)

· Overall performance metrics for email are down around 20%

· Year over year, the week ending with Black Friday had 20% more opens and 14% more clicks

· Deep discounts of 50% or more have been included in 38% of retail emails

PROMOTIONS/TIMING UPDATE
Wallet Hub reported that the average discount for apparel retailers last week was 46% (37% for furniture retailers). While sales are strong for most of you (accompanied in large part by lots of promotions), the following data reminds us that so much of the holiday season is yet to come and many shoppers are still waiting for the best promotions.

From Retail Dive (12/9/15)
· Of the three quarters of shoppers who aren’t ready for the holidays, almost half will wait until Christmas Eve to finish up, a 12-year high, according to a new study from America’s Research Group released Monday.

· That squares with research from last year from purchase-based data platform Cardlytics. Last-minute shoppers in 2014 were 36% of total shoppers, giving retailers a 12% increase in physical store sales, and a 27% increase in online sales the week before Christmas, according to Cardlytics. They also spent more, averaging $1,362 per person, almost $100 more than those shopping earlier, who spent an average $1,269 each.
We often talk with many of you about the subsequent impact of acquiring customers with promotions so we thought this was would be interesting to you (please keep in mind it is just one data point): Research by Retention Science found that consumers making their first purchase with a retailer on Black Friday were 19 percent less likely to make a repeat purchase and made 20 percent fewer purchases over time overall. Despite the fact that the majority of BF/CM shoppers studied didn’t turn into repeat purchasers, one thing was clear: These people were ready to shop. Customers who made their first purchases over the Black Friday/Cyber Monday weekend spent 12 percent more than other customers throughout the year.

IN OUR MAILBOX
Continuing with high double digit increases in direct mail in our mailbox YOY, we had an astounding 82 pieces last week in our mail box: 27 for apparel and accessories, 17 for misc, 16 for home, 13 for gift, and 9 for children’s. As more companies are recognizing the value in having a true marketing mix, we continue to see new brands in the mail each week; we personally launched 23 online retailers and wholesale brands into the mail this year. Here are some of the things that stood out to us:
· High numbers of small format pieces (cards, tri-folds, postcards) from companies like Crate and Barrel, Serena & Lily, Journelle, King Arthur Flour, and Athleta, just to name a few. These pieces are largely promoting 15-20% off.

· Finally a few toy catalogs targeted to kids over six: Marbles the Brain Store and Scientifics Direct.

· Digest size gift books from companies like CB2 and Guideboat.

· New brands in the mail including Andrew Marc, Violet Grey, and American Giant- all in different formats (8-panel piece, 36 page newspaper, and 32 page catalog respectively).

Looking ahead to 2016, we’d like to share with you our Save the Date for our 5th annual retailer summit in the bay area this April. We are pleased to announced our first two confirmed speakers: Stephen Gordon, founder of Restoration Hardware and Guideboat Co., and Angela Caltagirone, SVP Digital Marketing for Williams-Sonoma Inc. We hope you can join us this year as we push to make every year better than the year before it.
http://belardiostroy.com/belardiostroyevents/

This will be our last update until our holiday recap after the new year. We hope you have a great few weeks and we look forward to re-connecting with you soon,

Your Friends at Belardi/Ostroy