Holiday Update #6- Let It Snow

December 21, 2016

It is hard to believe the holiday season is winding down so quickly, but we hope you have a chance to slow down this week and spend time with your family and friends.

It looks like the holiday season is shaping up to be shorter than ever. Consumers waited to shop until Thanksgiving, and it will be a bumpy ride right to the end. 80% of our clients are reporting that month to date sales are up to LY, but it has not been a stellar season. With the exception of our emerging brand clients, single digit growth has been hard to come by and at the expense of much larger promotions. Our retail trade pubs are filled with news of retailers taking a hit; brands like The Limited, Macy’s, J Crew, American Apparel, and Sears continue to struggle.
It is harder than ever to break apart sales performance from promotions, which by several reports are up significantly. A few facts from Dynamic Actions Retail Holiday Index:
Promotions, including 30% off sales and buy-one-get-one deals, are up 34% over last year to date, and up 52% during the holiday season (Nov. 1 through Dec. 5) compared to 2015.
A reliance on promotions has reduced product profit margins for North American retailers by 19% compared to last year, and retailers have seen marketing costs rise 7%, with a 25% jump over the holiday season so far. Yet sales are failing to drive new customer acquisition, which is down 12% for the year and 6% over the holiday season.
At the same time, there are some reports of strength in retail, but if you look closely it is in categories like Outlet and not in specialty retail. November retail sales grew a solid 5% year-over-year and 0.1% from an already-strong October, according to the NRF, which exclude automobiles, gasoline stations and restaurants. Online and other non-store sales grew 15.3% year-over-year, reflecting the growth of online shopping. This mirrors what we are hearing from many of you, that ecommerce is very strong while retail store sales continue to be soft and down to LY. This is reflected in the 14% decline in seasonal workers hired by retailers in the first two months of the holiday season, according to global outplacement firm Challenger, Gray & Christmas.

In a season with record catalog volumes, there were a few that stood out to me last week:
· Stylish and playful mini-catalogs from Huckberry, JMcLaughlin, and Marine Layer all focused on gifting.

· A new men’s catalog from Todd Snyder (and a shout-out to our creative team who did an outstanding job putting this piece together).

· A suite of delicious-looking, gourmet food gift catalogs from Dean & Deluca, Mackenzie, Petrossian, and Olive & Cocoa.

· “Gifts that give back” from Bambeco’s latest catalog- refreshing and beautiful as expected.

At Belardi/Ostroy, we are relentlessly focused on progress. Over the last year, there have been tremendous improvements in technology and data. At the same time, we have always been focused on holistic planning across channels. After extensive time and resources, we are pleased to announce our Integrated Planning solution coming in early 2017. Our goal is quite simple: Deliver an integrated marketing plan across channels to both customers and prospects at a known addressable level in order to improve response rates and increase marketing effectiveness. We still see marketing budgets being built and executed at the program level, but the future is here. Our goal is to first start by identifying your target audience of customers and prospects, determine your most effective marketing channels online and offline, and then build a seasonal plan focused on the specific contact strategy to each segment, essentially planning “consumer first” instead of marketing first. More to come after the new year – stay tuned!

Lastly, we continue to work on our speaker lineup for our May summit in Napa, and we are excited to announced that Carlos Alberini, CEO from Lucky Brand, has joined our list of industry leaders. We look forward to seeing you there. Click here for registration.

Wishing you the very best in the new year (personally + professionally),
Polly & Your Friends at Belardi/Ostroy