Large crowd crowds and shops in a pedestrian street in Heidelberg, Germany, for… [+] Christmas
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Super Saturday is the last Saturday before Christmas and is almost always one of the top 10 shopping days during the Christmas season. But this year, Super Saturday is December 23rd, a meeting point for last-minute holiday shoppers and travel shoppers and, for a majority of consumers, the last real opportunity to buy holiday gifts.
The NRF predicts Super Saturday will see nearly 142 million shoppers on that day alone. To put it in perspective, that's actually less than Super Saturday in 2022, which took place eight days before Christmas, but it's also 15 million more than in 2017, the last time Super Saturday fell on the 23rd. December fell.
Leading up to that crucial final day, I strolled through my local mall (just Park Meadows in Lone Tree, CO) and found a mixed bag of results. If my experience on the ground is any indication, some retailers will definitely be winners, while others will be losers. Most retailers appeared to be well stocked. The difference was the level of desperation to move this stock. Some retailers' discounts were significantly deeper than others – Macy's and Urban Outfitters had 50-60% off signs, while most other retailers focused more on buy one 50% off, if they offered big discounts at all.
Retailers had set up far more sales than I expected and were offering discounts on clearance items – which seemed a bit early to me.
How do these unique observations fit in with everything else happening in the retail world? Read on to find out.
Economic indicators
US GDP was +4.9% in the third quarter, which is quite a blockbuster result. One possible reason why consumers feel good enough to spend money even if they say they're not doing well overall?
Further good news regarding consumer spending and consumer confidence is that UK inflation has slowed slightly further in December (so far). And UK retail sales rose 1.3% in November. While this is positive, it is also not the best news as sales growth has not been faster than inflation and overall non-food sales in the UK are still below pre-pandemic peaks (February 2020).
It's definitely more about finding a ray of hope in the still many uncertain news. A McKinsey survey of European consumers found optimism was rising, but consumers also reported cutting back and trading lower prices for the fourth quarter. And while there may be more climate-related supply chain disruptions in 2024, geopolitical disruptions may not be that long in coming – Houthi drone strikes in the Red Sea have led to Maersk rerouting shipments in the region, and retailers like IKEA are already reporting delays as a result.
And not to end on a pessimistic note about the economic indicators: Apparently, Christmas dinners this year will cost an average of 7% more in 2023 than in 2022 and 18.5% more than in 2021. Progressive Grocer is looking for its own silver lining points out , that it is not a across-the-board price increase, as some departments such as meat are actually seeing price drops throughout 2022.
Retail technology research and data
Tommy Hilfiger, the real real person, has a fashion video game coming out at the end of January. You can pre-register to download it, at least in the Apple AAPL App Store (how do I know? Ask me in January!).
The TikTok store has been growing month-over-month, to the point that if you extrapolate just November sales, that's $3 billion in annual sales.
Everyone has been talking about the Ozempic effect on snacks etc, but this newsletter is the first I've seen that talks about sizing – which is very interesting. The industry has long struggled with how to accommodate size. Do we want to throw it all away?
Apparently, consumers almost never log into retailers' websites, making it harder for retailers to target consumers and undermining first-party data strategies in response to the extinction of cookies etc. that enable consumer tracking. Am I sad that this is hard? No. It's true that consumers consistently say they want more personalization, but retailers' actions on this are clearly not valuable enough to entice consumers to sign up so they can reap the direct benefits of that personalization. Retailers need to make more of an effort here.
In 2023, no one will buy VR headsets. That would be a prerequisite for having a metaverse, so to speak. The friction is still just too high. Will Apple change all that? Their VR headset isn't really aimed at a metaverse, but more about trying out a new laptop UI, so I wouldn't get my hopes up for it.
In the next section on AI, I'll describe some predictions that Salesforce CRM has made. In the same article, they predict that next year (which seems like a long time) there will be $131 billion in earnings this holiday season. Another study says $80 billion. Whatever path you want to take, it's a lot.
Cognizant CTSH has released its 2024 retail forecasts. The rise of the physical store, yes, I agree with you. Seamless checkout-free experience – I'm not sure how this product will age. If we're talking about Just Walk Out, sure, at least because it's difficult to shoplift. But self-checkout in general is currently experiencing a major downturn, making the entire seamless checkout experience less exciting. Tailoring experiences to meet generational expectations – I think that goes without saying. I've also seen enough research that says that when you build your experiences based on generational stereotypes, you run the risk of alienating many consumers who are busy defining themselves as NOT a generational stereotype. There are more predictions listed in the article, and I'll be the first to say that it's difficult to make predictions. Therefore, it is always worth understanding the full context of the assumptions behind the predictions made.
AI and retail
Boots launches AI chatbot to help shoppers choose beauty products. Meanwhile, Rite-Aid was banned from using facial recognition technology in stores for five years as a result of a settlement over allegations of misuse of the technology. In the same week: the opportunity and the risk. Even if you're just recommending skincare products, Boots needs to make sure there's no room for bias or outright bad advice. The consequences may not be as extreme as Rite-Aid, but at least the EU is making efforts to ensure that there are real consequences.
eBay EBAY uses GenAI to help sellers post on social media. The solution creates a social media post containing hashtags and emojis. They plan to add auto-publishing, which will occur with the product listing rather than as an additional step. This is still an opportunity and a risk at the same time. AI is supposed to extract details from images and descriptions and then theoretically create a social media post that will resonate – but will it? An “average” social media post is created, not an “optimized” one… And then as more and more sellers use AI to create social media posts, how do you make your post stand out? Yes, it makes it easier, but does it make it better?
Finally, Salesforce estimates that 17% of online orders have been influenced by AI since November 1st and estimates that $194 billion in sales will be influenced by AI during the holiday season. I'm not sure what that really means. Do AI-driven sales have a higher conversion rate than non-AI sales? That would be much more interesting to know.
Winners and losers in retail
Amazon AMZN is trying to attract more Chinese sellers to the platform to fend off competition from Shein and Temu. Considering that I try to do half of my shopping by eliminating Chinese sellers from Amazon search results, this seems to follow Cory Doctorow's theory of the Internet. Is this in the best interest of buyers? Or in the best interests of Amazon? The two may well be mutually exclusive.
Costco, clearly a winner, announced a special dividend for the fifth time in 11 years. And Mango also had a “record year” and achieved sales of EUR 3 billion.
But proving that results are not universal, rising or falling, both Superdry and Nike NKE reported far less than stellar results in the same reporting cycle. Nike outlined a restructuring program that would cut $2 billion in costs over the next few years.
Finally, while the DTC market is expected to be tough and there will be acquisitions or mergers, recent activity might better be described as “bailouts”: Coupang's acquisition of Farfetch FTCH and Fraser's acquisition of MatchesFashion Group. Consolidation begins, albeit with rescue operations. Expect there to be more in this area.
Bottom line
So far the indicators show more negative than positive aspects. That's not to say there isn't good news, but it's still overshadowed by difficult conditions. There are winners in retail, but also losers. And that's a likely outcome for the holiday season in general: there aren't enough indicators to tell whether consumer behavior is changing dramatically (e.g., declining) or remaining strong, and some retailers may be able to capitalize on existing spending, and some retailers won't.