Though March officially kicks off the beginning of spring here in the U.S. – it seemed physical retail was not quite ready to shrug off its winter hibernation this year. According to the latest year-to-year report from RetailNext, foot traffic at retailers is on the decline – down, on average, nationwide 8.3 percent.
If the start of this report feels familiar, it’s not because it’s Groundhog Day in April. RetailNext’s third Pulse Report of the year bears some resemblance to the first two.
In early February of this year, the data firm released its first Retail Pulse Report for 2015 and kicked the year off with a lot of downward pointing arrows. January 2015 saw a 7.7 percent decline, on average, in both sales and traffic in U.S. physical locations when compared to the same period in early 2014. Average transaction value (ATV) and sales per shopper were also both down, though the decrease year to year was very slight – 0.1 percent.
"[Starting the year] we’re seeing the same sorts of trends we saw throughout 2014. The fiscal year closed with the same trends of traffic and sales being down. Conversion was very consistent, up .2 percentage points, and Average Transaction Value (ATV) and Sales per Shopper were essentially flat,” RetailNext’s Head of Business Analytics Chitra Balasubramanian told PYMNTS in a recent interview on its newly released Pulse report. “We’re seeing the same kind of declines we’ve seen all year. Hopefully once new spring collections are introduced and weather patterns begin to stabilize, we’ll see some changes in these numbers."
The weakness in January’s numbers were also somewhat explained by weather conditions nationwide best described as “biblical.” Unsurprisingly, the Northeast saw the steepest declines with sales down around 13 percent from the same time last year, while traffic was down 11 percent.
As tough as that report was, however, when asked directly if, given the volume of declining numbers, retailers should have reason to worry for retail, Balasubramanian didn’t think so..
“I suspect retailers will see some pent-up demand come through stores once the winter weather subsides or at least stabilizes a bit.”
Unfortunately, the Pulse Report released in March didn’t see much of that pent up demand liberated, as blizzards, subzero temperatures and mass failures of public transportation marked the winter of 2015’s transition from “biblical” to “apocalyptic.” Retail sales in February fell by 10.4 percent compared to February 2014, along with a 12.5 percent drop in consumer traffic, and an 11.7 percent drop in retail transactions.
With the ~8 percent drop in foot traffic to retail stores, the report on March 2015 is probably not everything the nation’s brick-and-mortar retailers were hoping for. Then again the Pulse is not devoid of good news and spring is a season for shopping, including the kick off to the latest retail phenomenon that PYMNTS exclusively broke a couple of weeks ago – Prommerce.
So what will retail look like coming out of the deep freeze?
March’s Mixed Bag
Traffic wasn’t the only thing down in March this year. On average, sales fell about 3 percent from the same time period last year. Falling sales numbers are certainly not good news – but that is actually the smallest hit sales figures have taken in the last five months. And while the number of transactions and consumers fell – the sales per consumer increased on average by 5.8 percent over the previous year. That also represents an increase over February’s 2.4 percent SPS increase and a significant improvement over January’s 0.1 percent of negative growth.
Conversion and average transaction value (ATV) were also on the upswing – though not terribly dramatically – in March 2015 when stacked up against March 2014. Conversions enjoyed their largest bump up this year so far with 0.9 percent, while ATV were more notably up at 3.5 percent.
The takeaway – consumers are going to stores less, which is depressing sales figures. However, consumers are also purchasing more when they buy and (consequently) spending more when they go shopping.
So there is a silver lining to that dark retail cloud.
The Regional Picture
As has been the case with previous reports – the March averages tend to obscure the very different retail pictures on display regionally.
The Northeast – where the weather has stubbornly refused to moderate throughout 2015 – unsurprisingly shows the greater weakness by the numbers. Traffic was down 11.4 percent while sales dragged by 4.4 percent. On the upside – when Northeasterners went shopping they were clearly ready to unpen their demands – sales per shopper and average transaction value were up by 3 percent and 8 percent respectively – the second strongest nationwide.
The strongest results were in the western part of the U.S. across the board. Though traffic was down, it was down by the smallest amount nationwide – a little over 3 percent. The West was also the only part of the U.S. where sales numbers actually achieved positive growth – and a pretty significant amount of it, up 8 percent from the previous year. ATV was up almost 12 percent and SPS increased by 8.3 percent.
The South and Midwest were the two regions whose results converged the most. In the Midwest, sales were down .8 percent, traffic was down 6.4 percent, ATV was up .9 percent and SPS was up 6.5 percent. In the South, sales were down more – 1.7 percent, traffic was down 7.4 percent, ATV was up 1.9 percent and SPS was up 6.4 percent.
The good news for retailers in this report may be that the news wasn’t all bad – and if one happened to be in the West, it was actually a pretty good time to be a merchant. There’s also much to look forward to in the spring for retailers – as it is dotted with several mini-shopping holidays such as Easter, Mother’s Day, graduation, prom and Father’s Day. Easter has already passed – and according to the NRF the holiday generated about $16.5 billion in retail activity – approximately $2.2 billion on candy (there are some estimates that place annual spending on Peeps for Easter at close to $400 million – that’s a lot of sugar).