Investors and Retailers Continue to Shrug Off Lower Sales Numbers
News reports from multiple outlets tracking back to a 6-month period suggest that retailers and investors may be too quick to attribute declining sales numbers to external factors. Consider the following news reports as evidence:
In October of 2018, the Wall Street Journal suggested that it was all too common and commonly wrong-headed to suggest that weather events made a huge impact on retail sales. Then, they went on to suggest that Hurricane Florence made a sizable dent to the retail sales figures for the country from the previous month. Even so, the forecast for major weather events isn’t exactly a bright spot for the retail industry. These are the rule, not the anomaly.
In January and February of 2019, Bloomberg reported on the lackluster Holiday Sales Report with the headline that “Analysts Are Questioning the Latest Retail Sales Figures.” The thesis seemed to be that it was just as likely that the federal government had delayed and even corrupted the quality of the data being collected and that the actual sales might be stronger than the numbers indicated. Reduced quality of economic and financial data from the federal government is unlikely to be an economic salve over the long term.
UPDATE (5/13/19): A new report from TDn2K shows a sizable drop in sales in the restaurant industry during April. In this case, the late Easter season is being blamed for the lackluster figures. This likely puts an additional strain and higher expectations for restaurant sales the rest of this spring and summer. Moreover, sales will likely have to increase at an accelerated rate to sustain profits. According to the report, employee vacancies seem poised to increase the labor costs for many restaurants.
Some Retail Brands Confounding Expectations
Companies and markets defy and confound analysts’ predictions all the time. As always, there are individual companies that outperform and are even outliers compared to the rest of the industry. After several years of up-and-down performance, Target seems to have made a breakthrough with the sustained development of their omni-channel marketing and customer experience initiatives. Meanwhile, Amazon long-seen as the retail-consumer-services company that could do no wrong is still experiencing trouble with the brick-and-mortar retail space. This lackluster performance has less to do with the launch of their Amazon Go/Books/4-Star stores and more to do with their inability to revive Whole Foods sales figure.
New Merchandising Resources and Technology
One of the ongoing bright spots for the retail industry is new merchandising technologies that are currently available and others that are on their way. It’s possible that current sales represent delayed indicators and untapped potential in the implementation of these technologies. Facial recognition software could be a game-changer for in-store retailers, especially if they’re able to adopt this technology in a way that’s unavailable to e-commerce retailers and computer privacy settings.
There are also economies of scale that make these technologies more affordable and thus more valuable for retailers. Because new planogram systems can track, report, and analyze consumer data across regions and cultures, international and multi-brand retailers can find the best planogram software in multiple countries in which they operate across the globe.