Holiday sales were promising, retailers are reporting upticks, macro-economic factors such as unemployment and auto sales have bounced back, and the ever-precarious real estate situation appears to be stabilizing.
Add some of the industry’s best attended and highly anticipated shows to the early year, and you’ve laid the ground work for a much-anticipated retail rebound.
Industry members and watchers should feel good heading into the new year with a shiny holiday season behind them. The National Retail Federation said sales for the all-important 2011 holidays totaled $471.5 billion, up 4.1 percent. This beat forecasts that had called for a 3.8 percent increase.
Some chains performed particularly well in December. TJX continued its positive ways with an 8 percent same-store-sales gain; Macy’s enjoyed a 6.2 percent increase; Pier 1 reported a huge 11.3 percent increase and Williams-Sonoma enjoyed a 4.2 percent increase over last year’s holiday sales.
Does all of this sound familiar? It should, because the current state of the home furnishings business is very similar to the state of the home furnishings business at this time last year. Cautious optimism ruled. Trade shows were booming and retailers were placing orders.
At the risk of sounding like Dukie Downer, last year’s road to recovery turned into just another strip of potholes for some. Around the middle of the year, customers became few and far between for some retailers. The sudden, unexplained lack of customers left some retailers looking for answers.
A possible clue to the disappearing customer may be found in the Consumer Confidence Index. Last February, consumer confidence was rated at 70.4, its highest reading since February 2008. By May the Index had dropped to 60.8. It finished at 45.4 in August.
What was behind the precipitous drop in consumer confidence through the spring and summer?
I spoke with a well-known industry consultant last month who blamed political sniping as one cause to last year’s flat lining.
“Summer sales just collapsed,” the consultant said. “Consumers stopped buying because of all of the end-of-the-world talk centering around the debt ceiling. Talks of the possible double dip in the recession really affected consumer confidence.”
At press time, the Consumer Confidence Index stands at 64.5, almost exactly where it was last February before the drop. Can it maintain its current healthy state?
Here’s to hoping that the phrase “double dip” will only be heard at ice cream shops in 2012.