Promotional Sales Attract Consumers and Boost Conversion Rates

What do the Holiday Promotional Sales Numbers Tell Us?

The holiday season is always a time of promotional sales.  This past season was no different.  The results show overall sales for the season was up around 4%.

With all the talk of low gas prices and dropping unemployment rates, the numbers are a blow for offline retailers. Consumers are looking for more online choices.  Retail needs to adapt to survive.  2015 will see store closings and more of the same.

Promotional Sales Numbers Comp sales, online sales

A blow for offline retailers?

Promotions started early this year and consumers took advantage.  U.S. retail stores saw an 8% decline in foot traffic and sales  . Retail spending fell 0.9% in December.  It was the biggest month to month drop in nearly a year.  The many promotional sales through the recovery have left consumers expecting discounts.

Consumers took advantage of early November promotional sales and are still reluctant to spend.  Combined with the rising number of online shopping and we see the reason for the 11% decline in Black Friday sales.  We saw more in store spending and a 2% higher conversion rate.  The increased sales volume was because of more purchases at promotional sales pricing.

With online sales continuing to rise, the pressure is on retailers to adapt to the consumer. Poor planning, and failure to change with consumer buying habits, have retailers closing stores despite the holiday numbers.

Comp Sales by Industry

Consumers are looking more online for choices.

Whether shopping for products or reading reviews, informed consumers online are purchasing more.  Online sales, including sales from mobile devices, for cyber Monday were up 17% from a year ago.

  • E-commerce sales up 6.8%
  • Rose more than broad spending
  • Online sales are 13% of all retail sales.
  • unique online shoppers increased 7%
  • Online mobile sales increased 27.2% from a year ago.
  • Online mobile sales were 22.6% of all online sales.
  •  average online receipt increased 11%.
  • Best Buy  comparable online sales increased 23.5%:
  • Close to 60% of Amazon customers shopped on phones.
  • Target.com sales made on mobile phones were twice as high as last year.

Retailers giving consumers many ways to shop online and offline have more success than competitors who don’t.   In store promotional sales should be offered online as well.

Consumers are shopping online more and the declining December sales numbers may be a blow for some offline retailers.  It is not all bad news for retailers.   Luxury retailers ran less promotional sales like Coach and Calvin Klein.  Some ran none at all like Ted Baker.

Amidst all the talk of the lowest gas prices since 2009 and dropping unemployment rates consumers still hesitate to spend.   We know gas prices rise around Labor Day.  We know there are upcoming store closings and layoffs.  We now await the Fed to see if interest rates will rise.  2015 will be much the same as 2014 and promotional sales will continue but slow in the luxury retail market

By David Baker  Thanks for reading.

References:

Farfan, Barbara All 2015 Store Closings – Stores Closed by U.S. Retail IndustryChains, about.com, http://retailindustry.about.com/od/USRetailStoreClosingInfoFAQs/fl/All-2015-Store-Closings-Stores-Closed-by-US-Retail-Industry-Chains.htm

Loeb, Walter, Unrelenting Competition: The Biggest Retail Story of 2015, Forbes, http://www.forbes.com/sites/walterloeb/2014/12/16/unrelenting-competition-the-retail-story-of-2015/

David, Don, Holiday web sales beat forecasts, Internet Retailer, https://www.internetretailer.com/2015/01/07/holiday-web-sales-beat-forecast

Craig, Victoria, The Double Life of Retail Promotions, Fox Business.com, http://www.foxbusiness.com/industries/2014/12/04/double-life-retail-promotion/

Griffiths, Ben, Fashion retailer Ted Baker posts leap in Christmas sales despite refusing to slash prices in the run-up to the festive period,The Daily Mail, http://www.thisismoney.co.uk/money/markets/article-2901985/Fashion-retailer-Ted-Baker-posts-leap-Christmas-sales.html

D’Onfro, Jillian, AMAZON: Here’s The Final Tally For All The Insane Shopping Everyone Did This Holiday Season, Business Insider, http://www.businessinsider.com/amazon-christmas-shopping-release-2014-12#ixzz3OkAPqFeS

Ojeda-Zapata, Julio, Target reports new records in digital performance during the holidays http://www.twincities.com/technology/ci_27281084/target-reports-record-breaking-holiday-season-sales-figures

Grannis, Kathy, Retail Holiday Sales Increase 4 Percent, National Retail Federation, https://nrf.com/news/retail-holiday-sales-increase-4-percent

Bose, Nandita Holiday season U.S. store sales down 8 percent in 2014: RetailNext, Reuters http://www.reuters.com/article/2015/01/08/us-usa-holidaysales-idUSKBN0KH01P20150108

Mutikani, Lucia,  U.S. retail sales drop biggest in 11 months, but seen as a blip, Reuters http://www.reuters.com/article/2015/01/14/us-usa-economy-idUSKBN0KN1HY20150114

Harrison, Greg, December Retail Sales Expected to Show Effect of Good Weather, Fewer Promotions http://alphanow.thomsonreuters.com/2015/01/december-retail-sales-expected-show-effect-good-weather-fewer-promotions/

Derrick, Jayson, Piper Jaffray: Ralph Lauren More Promotional, Coach Less Promotional, benzinga, http://www.benzinga.com/analyst-ratings/analyst-color/14/11/5043231/piper-jaffray-ralph-lauren-more-promotional-coach-less-p#ixzz3OwKX5u7Y