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As Same-Store Holiday Sales Fizzled, Home Furnishings Represent An Outlier

Price-conscious consumers continue to shift online, but as Crate & Barrel COO Michael Relich notes, home decor is still driving store visits.

As Macy’s, Sears, Kohl’s, Wal-Mart, and other major retailers saw rosy holiday season store sales fail to materialize, as Amazon and e-commerce spending surged, there was one bright spot for store traffic: home furnishings.

An eMarketer analysis of the recent retail travails confirmed shopping trends that established brands have been wrestling with for years: the need to bridge online and offline strategies to combat “showrooming” along with the need to resize large “big box” stores that have become obsolete in most areas.

A Mixed Retail Picture

General merchandise and discount brick-and-mortar store purchases slipped 2.8 percent during the holiday season, while corresponding online sales jumped 29 percent, eMarketer noted, citing spending tallies by card-payment processor First Data in its 2016 SpendTrend report.

That sales trajectory was the same for apparel/accessories category with brick-and-mortars experiencing a 0.8 percent in-store drop versus a 5.4 percent increase for e-commerce channels. Sporting goods, hobby, book and music stores’ physical store sales dropped 6.9 percent, compared to e-commerce gains in those areas of 19 percent.

Despite all the news of store closings by Macy’s and Wal-Mart, most of which were planned this past summer, the holidays were not a complete disaster. To put the season’s retail activity in context, the First Data numbers show overall sales during the period between Black Friday and Christmas were up 3.6 percent, due primarily to a 12 percent uptick in online spending. Physical store holiday sales were up 1.6 percent — a lesser gain compared to 2015’s 2.5 percent increase. E-commerce rose to 21.3 percent of the 2016 holiday season’s sales, up from 15.4 percent in 2015.

To be sure, Amazon remains the main driver of e-commerce and retail’s bggest challenge. Citing a report from Slice Intelligence, eMarketer noted that Amazon sales comprised a 38 percent chunk of online sales. But there are some areas that remain immune from Amazon’s growing take of consumers’ spending.

Higher Price Points Drive In-Store Activity

DIY home improvement, gardening, and home decor represented an outlier in generating same store purchases and visitation, with overall sales rising 10.7 percent, eMarketer noted.

The furniture & home furnishings category in particular saw a combined brick-and-mortar and e-commerce sales rose 2.2 percent, suggesting that omnichannel strategies may be working.

Still, the home area has a clear advantage: the higher prices for couches and dining room accessories tends inspire consumers to want to see it in person to make a purchase decision.

“When people buy for their homes, they are less price conscious,” said Crate & Barrel COO Michael Relich, in eMarketer’s report, and added that the chain experienced a positive period. “The home sector does well when the housing sector is doing well.”

Slice also estimated Home Depot’s holiday online sales rose 40 percent while Lowe’s jumped 58 percent.

Health & personal care stores represented another holiday success. First Data showed combined online and physical store sales in the category rose 5.6 percent, following a 2.4 percent gain in 2015.

As all retailers look back on the successes and failures of this past holiday season, coming to terms with what Amazon has wrought will continue to loom over the decisions of company leaders.

As retail vet Ryan Craver, SVP Emerging Brands, Licenses & Digital Strategy at Lamour Group and President/CEO of its Trimfit apparel unit, told GeoMarketing last month, “History comes at a price that Amazon is not willing to pay — or needs to.

“They don’t have all that legacy infrastructure and cost. Amazon starts brand new small format stores regardless of what they put in them. They’re a lower cost-base. They don’t have all that legacy burden that major retailers do and have the flywheel to fund bets.

“Everything Amazon does all comes back to the idea of “thoughtless commerce,” Craver added, pointing to the seamless one-click purchasing and the personalized anticipation of consumers’ demands. “It’s about the convenience factor… Ultimately, this is all healthy for the industry. It’s going to put us in a much better position.”