Another year of “retail apocalypse”? Not quite.
Share Now on:
Macy’s announced today that it will close nearly 30 stores. It also reported a 0.6% drop in its in-store sales this holiday season. Which actually wasn’t as big a decline as expected. Pier 1 Imports also says that it’s shutting down almost half of its stores — around 450 locations.
But if you’re getting a bleak picture of what went down this holiday season, it’s not quite that simple.
We’ve been saying for a while that consumer spending is strong, and that’s still true. Holiday sales jumped by almost 3.5% in 2019 compared to last year, according to Mastercard. Denise Dahlhoff, a senior researcher at The Conference Board, said the U.S. consumer is doing fairly well.
“We have a good job market. People feel pretty good, economically, so they are ready to spend on the right items and in the way that they want to,” Dahlhoff said.
The way that they want to. That’s the key phrase.
Sonia Lapinsky, a managing director at Alix Partners, said understanding how the consumer wants to shop today is key to retailers doing well. Online sales jumped by almost 19% this holiday season.
“The consumer continues to migrate towards online,” Lapinsky said.
And you see this trend play out in different sectors of retail. When you look specifically at department stores — which we know have been struggling —overall holiday sales fell by 2%. But their online sales jumped by 7%, according to the same research.
The problem is in the stores. U.S. retailers announced more than 9,000 store closures last year. Lapinsky said this doesn’t mean brick-and-mortar stores are dead.
“The experience in-store is ultimately is so important today,” Lapinsky said. “There has to be a compelling reason to go to the store, because, otherwise, they’re just going to be online, they’re just going to be on Amazon.”
So, New Year’s Resolution, retailers: figure that one out.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.