While there are many current events happening every day in the retail industry, a common theme throughout seems to be the approaching holiday seasons and expected sales. Companies have been worried about their fourth quarter sales, which usually generates the bulk of their annual sales. Consumer spending has not increased since the recession, and consumers are looking to spend as little as possible even through the holidays. Small companies especially are worried that this could "push their businesses over the edge." Nikoleta Panteva, a retail analyst for IBISWorld Inc., states that small merchants usually garner 25-30% of their total annual sales in the last six weeks of the year, as compared to 20% from the big box retailers. There is only so much a small company can do to stay in business- many have been lowering prices, however, there is only so low they can go to still make a profit. A main problem for them seems to be that larger stores offer a wide variety of products, where as smaller stores usually specify on one specific product which causes them to not attract as many customers.
Contradictory to that last statment, another article explored how Coach is expecting excellent growth in the holiday season, despite having a more narrow line of products similar to a small merchant. They saw profits rise 14% in their fiscal first quarter earnings on strong handbag and accessory sales, as well as growth in the men's business. Coach also reported strong growth outside its brick and mortar presence, with the company website posting double digit sales growth and mobile commerce accounting for over 15% of Coach.com's total site traffic.
Both article go on to make very different but important points about the current trends in retail. On one hand, many retailers are worried about the upcoming holiday season not reaching their sales expectations. This is a time when the retail industry flourishes, and it could seriously hurt many businesses if sales are not up to par. Small businesses especially have reason to worry, seeing as how their sales have not met expectations all year, and a bad holiday season could mean the end for them. As bad as these trends seem, they were not unexpected. In an uncertain economy, people are trying to spend less on discrentionary items and have cut back on gift giving because money has become so unavailable. Many people are looking to get all their holiday gifts from discount retail stores such as Wal-Mart or Target, and may not even glance at small merchants anymore. On the other hand, some companies such as Coach are looking at the holiday season with optimism. Their profits generated from the online and mobile markets have given them hope to continue a successful year into the holidays. Since it was so successful for Coach, maybe some other retail companies should follow their lead and focus more attention on these markets to increase growth and sales.
http://online.wsj.com/article/SB10001424052970204644504576652771127742178.html
http://online.wsj.com/article/SB10001424052970204422404576597442264003476.html?mod=WSJ_hps_sections_smallbusiness
While looking for information for my blog post, I noticed that the big box retailers, as you said, are already overpassing their last fiscal year revenues and they are only finishing the second quarter. It is going to be interesting to see how will this companies do during the holiday. As you said, they are better off than small companies because of their wide variety of products at low prices. By now, Wal-Mart for example, has increased its revenues $ 103,016 millions to $ 109,366 millions in the second quarter of this fiscal year, compared to the second quarter of last fiscal year. If this growth continues, I bet that this major companies are going to due just fine in the holiday season, specially when people are looking for low prices. We will have to see what happens.
ReplyDeleteThe next couple of months are going to make or break times for a lot of retailers. This is true because a lot of people are predicting sales for retaielrs such as best buy and wall-mart. It is very importaint for retailers that people spend money this holiday season so that they can meet or beat projected sales this holiday season. In fact, most of these corporations profits this quater (retailers) rely on the holidays to boost their earnings.
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