Dispatches from the retail front lines
Posted by: John Tozzi on December 03, 2008
Earlier this week, we asked small retailers to tell us what you’re seeing this holiday season. So far I haven’t heard any tales of real slow sales.
Keri, who runs an independent book shop in Hampton, Iowa, says she’s seen the benefits of a “shop local” ad campaign:
My business is up almost 50% this year. My “black Friday” was the busiest it’s been in 3 years, and my December sales are steady. We had our first real snow this weekend, so shoppers are perhaps now ready to shop.
We’ve been doing a lot of work advertising to shop locally. I believe it is paying off.
In a comment on our earlier post, Jeremy says order volume at his online pearl retailer has been strong, but people are spending less: the average order price is down by a third. He sees customers responding to discounts:
On Cyber Monday we launched a private sale directed at our past customers, selecting products that allowed for the deepest possible discounts and largely available in our inventory. Our target pricing was very similar to average per-sale values over the weekend.
The sale drew in more than 7000 visitors to the site within the first 12 hours and our conversion rate was just above 6%. Our average conversions hover around 2%. It was a very successful sale.
For a big picture view of online sales, ComScore reports a 15 percent jump in online retail sales on Cyber Monday, but a 2 percent drop from last year during the Nov. 1 to Dec. 1 period. (Keep in mind Thanksgiving was earlier in 2007, so there were more “shopping days” last year.) Still, ComScore predicts November/December online retail sales will be flat at $29.2 billion this year. That’s surprisingly pessimistic — others predicted 9 to 12 percent growth online for the holidays.
Anyway, keep sending us your stories, either in the comments or by email. We’ll check in with Keri, Jeremy, and others in the weeks ahead to see whether the patterns they’re seeing hold up.
Late update: I blogged too soon. Just after I wrote this post, a stationary store owner in suburban DC described the dismal holiday she’s seeing in a comment. Caroline writes:
For us, the past four months have been Ho Ho Humbug! As we enter our fourth year of operation, we’ve seen our business change from being profitable to becoming a ever-increasing liability. This past Black Friday weekend, we saw sales at 50% of last year. We rely on 4th quarter revenue to balance out the slower summer months’ sales as well as providing cash flow to take us into the New Year.
To satisfy the new consumer who is looking for the deep discount puts our business at peril. A fifty percent discount on our products equals negative cash flow. So, which makes more sense for the small retailer faced with this type of challenge; 1) discount products to reduce inventory and eliminate all margin, or 2) lock the doors, lay off staff, and continue paying rent for the duration of the lease.
I’d guess it’s harder for brick-and-mortar shops to deal with shoppers who are more price conscious for exactly the reasons Caroline describes. Low-overhead online shops obviously have more flexibility to cut prices. Thanks for the comments and please keep the stories coming.