“Shopping data a coal in stocking for retail stocks” – Associated Press
“Holiday Retail Sales Up Just .07%” – San Francisco Chronicle
“US Holiday Retailer Record Worst Holiday Season Since 2008” – The Globe and Mail
A bit unsettling, don’t you think? But why were sales down? I have done some reading and thinking on the subject. The various commentators have their theories and I have mine. Below is a list of what they saw as the problem followed by my insights.
First, here are the reasons cited by the commentators:
- Super storm Sandy had a big impact on the Northeast, particularly the greater New York retail economy.
- Concerns over the Fiscal Cliff caused people to hold back on spending.
- The horrible shooting incidentin Newtown Ct. depressed people.
While I think that these reasons are all germane, I believe there are other causes that are of more concern as they are not momentary but part of a longer cycle that we are going to face for the next several years:
- Sales of apps undercut the retail market. Because apps are extremely inexpensive (many are free) and seen as having such high perceived value, I believe that some spending shifted from high retail consumer products to very low cost virtual ones. In other words, people still bought gifts; they just got them for far, far less.
- Consumers spent differently. For example, while toy and video game sales were off this year, the theme park industry was showing an increase. According to Theme Park Post, Universal reported that its theme park business was up 5.8% in the third quarter while The Walt Disney Company reported a record year, due in part to increases at all of its theme parks. Money spent on trips was money not spent on toys.
- More play supply than demand. Let’s face it; the world has never had so many ways to play. You can take your pick between a bevy of toys, video games, apps, digital games and more. How can the toy industry expect to be up when there are so many play options?
Bottom line to me is that people are still buying gifts and spending money on play. It is just that that money is not being spent in traditional retail outlets and on traditional toys. Until the various play industries adjust to this new reality, I think we could see continuing challenges in growing market share.
Why do you think 2012 was a bad year?