Another month, another round of mixed retail results, according to RetailNext’s latest Physical Retail Pulse report.
Most of the news this month was in line with the “new normal” that has emerged in physical retail over the last 24 months — but perhaps a shade darker. Foot traffic was down again — though by more than it has been in the last three months. Declines averaged around 9 percent between April and June, but that expanded to 11 percent last month.
And, also in the last several months, sales and transaction volume were also down, but sales per shopper and conversions were on the increase.
However, while largely consistent with the last few months’ results, there was one notable flip of figures into the red. Though average value per transaction has been on the increase and in positive territory for most of 2015 so far, in July those numbers stumbled a bit and out of positive territory.
“The one kind of interesting factor that impacted July sales more so than previous months is we did see a drop in average transaction value. A slight drop of 0.2 percent but still notably outside the norm for the year,” Shelley Kohan told MPD CEO Karen Webster during their monthly postmortem on the physical retail traffic figures. Kohan is the VP of retail consulting at RetailNext.
An aberration, Webster noted, that looks a bit like cause for alarm going forward since more numbers going into the red is not what anyone wants to see eight weeks before the holiday shopping season goes into its early rounds.
“This really is the first time you’ve seen the ATV take a nosedive this year,” Webster noted. “Is it a little bit of a concern that it is moving in the wrong direction?”
Kohan said, “No” — but with a bit of an asterisk. The July ATV result is a blip, but the total movement of the figures, combined with recent data about consumer behavior, should be piquing the interest of merchants everywhere — especially going into back to school and the most wonderful time of the year.
So what was up with July and what does RetailNext see in the crystal ball?
The Quirks Of July
“July is always a tricky month for retailers. A lot of that decrease, almost 100 percent of the decline in the ATV, came out of the last week of July,” Kohan noted.
“I don’t know why it would drop so much the last week of the month except that July is such a heavily clearance-promoted month for retailers.”
Because July is a month where many retailers are changing over their stock and in some cases offering big discounts, Kohan noted she really wasn’t all that concerned in the single and slight ATV decline — particularly in the face of improving trends toward the end of the month.
“When we look at July, the positives that stand out are that the weekend business, particularly during the last two weekends of August, have been strong. They have been the strongest part of the month overall,” Kohan noted. “A lot of that last two weekend bump is the start of back to school.”
That is a trend that Kohan thinks will continue into August and beyond and one that will likely buoy those ATV figures.
And while that is good news, Kohan told Webster, this month’s latest pulse report demonstrates a rising trend in physical retail where consumers are streamlining their shopping experiences. A shopper that might have once visited 10 stores, Kohan noted, is now likely to only visit five.
“How does a retailer make sure they are one of the five is the essential question. They are all looking at when my customer comes in, how do I make the experience feel relevant, inspiring and captivating so they will come back.”
Rewiring The Retail Experience
The trend going forward, Kohan told Webster, is moving increasingly toward digital retail and a converged experience, where consumers might start a shopping journey online and actually finish in-store, or vice versa. And those numbers, she noted, are somewhat difficult to track in this pulse report since they are largely dependent on the retailer and how they report those sales.
“It really depends on how the retailer logs the sale. If it comes from a particular store, it is part of our numbers; if they give the sale to their online business, we aren’t seeing that number.”
The bottom line, however, according to Kohan, is that going forward online-to-offline flexibility is going to be a key competency for retailers looking to make the essential visit list for selective consumers. According to research, 30 percent of shoppers have bought online and picked up in store in the last month. And within that 30 percent is a lot of potential value — especially if they aren’t picking up curbside but actually entering a store.
“What retailers really want is the customer coming into the store, because when they are there, they go on to spend more money 65 percent of the time and that is something that is absolutely a trend.”
And while the online to in-store experience offers some great opportunity for retailers, Kohan also noted it is not a path without risk. Among consumers, as many as 60 percent reported some form of friction (mostly in the form of various types of delays) when they actually appear to pick up their goods.
Consumers, Kohan noted, are changing, particularly when it comes to their expectations. A customer shops less than they once did and more often than not show up informed and easily disappointed if store staff can’t keep up.
And because customers are changing, it is time for retailers to change too. Kohan expects the marketplace will continue to see those shifts as retailers focus increasingly on operating fewer stores but offer more where they are operating.