Retail Sales for Holiday/December

NRF: Holiday sales +5.3%, missing projections read more >>
Mastercard: Holiday sales up +7.6%, beating projections read more >>
Census: Q4 Sales Up +7.1% (seasonally adjusted) read more >>
Adjusted for inflation, Holiday sales were largely flat with restaurants, e-commerce, and home improvement seeing real gains

Physical Retail's Increasing Importance

Party City Files For Bankruptcy, but Sees Path Forward read more >>
Bed Bath & Beyond Hires Law Firm as BK Filing, Potential Sale Seem Imminent read more >>
Retailers to Watch for Bankruptcy in 2023 read more >>

Sources: Retail Dive, Chain Store Age, Creditntell

Amazon will end its “Amazon Smile” charity program on February 20th, promising to donate 25% of each charity’s Smile earnings in 2022 as a final payment in 2023. The company says it will continue to invest in charitable causes where it can make “meaningful change” such as affordable housing and access to technology education in underserved communities

Chipotle Mexican Grill, the fast-casual food chain, said on Thursday that it plans to hire 15,000 jobs ahead of its busiest time of year, a sharp contrast to the other large companies that are laying off employees because of pandemic overexpansion and worries about the economy. Chipotle also stated their long-term goal of 7,000 N. American restaurants, more than double the current footprint.

Condado Tacos is expanding into new markets. The fast-growing, casual-dining chain, which specializes in build-your-own tacos, margaritas and tequilas served in a colorful and energetic environment, announced locations for 12 new sites it plans to open in 2023. The openings will bring the company into eight new markets including St Louis, Buffalo, Charleston, Greenville, Birmingham, Huntsville, Knoxville, and Louisville. The company currently has 39 restaurants in 7 states ranging between Michigan and North Carolina.

Five Below is banking on the higher-priced Five Beyond concept to buoy its sales. The idea began as a collection of higher-priced items on a shelf in existing Five Below stores and has since grown to a store-within-a-store concept that is now in 250 locations. In addition to adding Five Beyond to 400 more stores in 2023, the company also plans to open a record 200 new stores this year.

H-E-B is opening a new two-level 97,000 SF store in Austin, Texas next month. The store will feature a variety of prepared food and restaurant options with an outdoor seating area that features views of Lake Austin. See more here >>

Home Depot continues to work towards its goal to become 100% reliant on renewable electricity sources. The home improvement giant, which has pledged to produce or procure 100% renewable electricity equivalent to the electricity needs for all of its facilities by 2030, is working with renewable energy resource provider DSD Renewables to install 13 megawatts (MW) of rooftop solar across 25 store locations in California.

Joann announced a $200 million annual cost reduction plan that relies on declining ocean freight rates. Joann expects to realize $15 million to $20 million in savings next quarter due to lower ocean expenses. “Excess import freight costs have now effectively transitioned from headwinds to tailwinds,” said CFO Scott Sekella.

Lowe’s announced the launch of an in-store kids' birthday party program “that aims to inspire the next generation of builders while giving parents a comprehensive one-stop party solution.” Lowe's new “Build A Birthday” party pilot expands on its successful monthly kids' workshop program. Starting January 19, parents can book a paid, private party in 10 Lowe's stores across the United States (including the Huntersville, NC store). Prices start at $349.

Macy’s CEO Jeff Gennette says the retailer is in the last stages of closing underperforming locations. The company has closed 170 stores since 2016, but sees that pace slowing down in the near future. Macy’s focus has been on opening off-mall locations such as the 50,000 SF Bloomie’s concept and the 25,000 SF Market by Macy’s. Opening brick-and-mortar locations ultimately works in tandem with Macy’s digital strategy, according to Gennette. “There is just this kind of irrefutable truth that brick and mortar seeds digital activity. Customers really do want to have the option of shopping in the zip codes that they live. And where we have a store, our penetration online is significantly higher. When we close the store, it drops significantly.”

Sam’s Club plans to open more than 30 new clubs across the United States during the next several years. The first location, which is planned for Florida, is slated to open in 2024. This is the first new expansion for Sam’s Club in over five years. In 2018, the chain closed 63 stores (though 12 were converted to distribution centers). The new stores will be 160,000 square feet (about 14% bigger than the current prototype.

ThirdLove has enlisted Leap, which works with several digital initives in developing their in-real-life footprint, to open a new location in Philadelphia’s Rittenhouse Square neighborhood, a popular shopping district. ThirdLove is the only national intimates brand to open in Philadelphia aside from Victoria’s Secret, according to a Leap spokesperson.

What will the Target store of the future look like? If current trends are anything to go on, the answer may look very different depending on where you live! While the full-sized Target prototype gets an expansion and refreshed look that will be emulated at future openings and remodels, the company is still designing smaller format stores to fit into a variety of urban and suburban locations each with local design elements. Read (and see!) more in this article from Chain Store Age >>

With several retailers on the verge of bankruptcy amid an environment of inflation and higher interest rates, Fitch Ratings recently presented at the annual ICR conference in Orlando with an outlook for 2023 that sees the gulf between retail winners and losers widening further in the months ahead. Read more from Cara Salpini in Retail Dive here >>

Video of the Month:
Online returns are well-known to be the a major drag on retail profits as customers now expect that any item can be returned for any reason for free, which not only costs a lot of money in terms of shipping and handling, but also leaves quite a bit of unwanted merchandise for the retailer to deal with. As a result, liquidation of returned merchandise has become a $644 billion business in recent years. Watch video >>

Restaurants continue to take a larger share of our food spending, even as economic headwinds begin to swirl. Are we all just too busy to cook at home like we did in 2020? Or is this just a return to a trend that had been picking up steam throughout the last decade when restaurant sales surpassed grocery sales for the first time? Source: US Census Bureau

As we begin the year, the retail headlines aren’t looking particularly promising. But looking under the hood, things might not be as bleak as they seem. Take Holiday sales for example, many of the headlines have highlighted the fact that December’s sales were lower than November. This may seem counter-intuitive, as one would expect higher spending the closer we get to Christmas and a later-than-usual Hannukah. However, did you know that December has had lower overall sales than November in 4 of the last 5 years and half of the last 10? Every year, holiday decorations seem to show up earlier and earlier inside stores. It’s no accident that retailers want to spread the Holiday buying season over a longer period of time. It leads to better inventory management and less promotions, thereby inflating margins. It also means that more stuff is bought in November than ever before.

It's not all good news of course, inflation has taken a bite out of some numbers that in ordinary times might be cause for celebration. In fact, when adjusting for this only a handful of categories ended the 4th quarter in positive territory. One of those categories however (and the best performing by far), was restaurants with a 12% increase vs. last year (+6% adjusted for inflation). Normally, restaurant sales declines are the first signs of a recession, yet we haven’t seen that yet. This could be happening for a number of reasons. In some cases, as more people return to an at least partial in-person work schedule this has forced more people to rely on quick service restaurants with less time to prepare meals at home. Meanwhile, restaurant staffing continues to be a headwind, but one which has moderated significantly through 2022. As a result, service has gotten faster and more reliable, a trend that has helped the fine dining segment improve its results.

It's fair to enter this year with a bit of economic anxiety, but in our sector, demand for new retail space remains as high as ever. While big tech firms have finally reached their day of reckoning and must right-size as the era of free money is over (for now, at least) and profitability once again becomes paramount; brick & mortar retail looks ready to compete on a more level playing field. The lack of new supply and the relatively good health of the best retailers (Five Below, TJX, Ross, Target, to name a few) means that there are plenty of silver linings if you know where to look!

Happy New Year!

Mike Jordan

SONG OF THE MONTH

While the college football world celebrates Athens, Georgia for the Bulldogs national championship, in the 1980s Athens was also the center of the music world. Or, at least that part of the music world that championed quirky outsiders like R.E.M., Pylon, and the incomparable B-52s. With their surf guitar licks, far-out lyrics, and disco meets punk rhythms; no one else sounded like the B-52s when they burst on the scene back in 1978. The band recently played its last ever show on November 15th in Athens. Let’s go back to where it started with this Australian TV performance of “My Own Private Idaho” from 1980.

Listen to the Song of the Month

Big VIP - Issue #3

Retail Sales for Holiday/December

Physical Retail's Increasing Importance

Get the Big VIP Newsletter Delivered Directly to your Inbox