×

Once registered, you can:

  • - Read additional free articles each month
  • - Comment on articles and featured creative work
  • - Get our curated newsletters delivered to your inbox

By registering you agree to our privacy policy, terms & conditions and to receive occasional emails from Ad Age. You may unsubscribe at any time.

Are you a print subscriber? Activate your account.

Retail Holiday Sales Rise, But 2017 Won't Be Rosy For All

By Published on .

Santa and Mrs. Claus kick off a season that was anything but jolly for Macy's at the retailer's annual Thanksgiving Day Parade.
Santa and Mrs. Claus kick off a season that was anything but jolly for Macy's at the retailer's annual Thanksgiving Day Parade. Credit: iStock.
Most Popular

Don't be fooled by rosy retail holiday sales reports. It's true that the sector finished well, but not everyone benefited—e-commerce was hot and there were pockets of strength among retailers like Gap and American Eagle. But the performance of department stores was weak, and some analysts are predicting multiple bankruptcies in the specialty sector by the end of the year.

Buoyed by factors like the seasonally crisp weather and positive marketing messaging among retailers, early indications were vigorous. Research firm Customer Growth Partners upgraded its forecast to a 4.9% gain in sales to $637 billion for the period from its earlier expected 4.1% rise. Online sales generated $91.7 billion, an 11% increase over the 2015 holiday season, according to Adobe, which said that 57 out of 61 days in the period resulted in over $1 billion in e-commerce sales. Final results from the National Retail Federation, which had expected an increase of 3.6%, are expected this week.

"[The season] ended on an up note," said Richard Jaffe, retail analyst at Stifel Nicolaus & Co. on a recent conference call, adding that last-minute brick-and-mortar shopping and gift-card use the week after Christmas helped to pull retailers into the black.

But not all of them. Macy's last week reported a 2.1% drop in holiday same-store sales and announced layoffs surpassing 10,100 as it closes stores. Kohl's and Sears also posted sales declines as consumers shunned the sector.

"Net results are mixed with a few winners and a few losers," said Mr. Jaffe. "Longer term into 2017, there are probably four to six bankruptcies that will be announced." He noted trouble at Limited Brands and J. Crew.

Those poor results came despite factors like the weather, which cooperated this season. Unlike last winter's unseasonable warmth, which sent retailers of cold weather apparel into a downward sales spiral, December 2016 was actually cold. The chillier temps in eastern states benefited apparel stores by an estimated $309 million compared with last year, according to Planalytics, which provides weather analytics for businesses.

Going forward, retailers should do well to continue one seemingly successful ad tactic: Emphasize inclusion. Many of the ads that preached inclusion and giving performed well on the likability spectrum. Amazon's commercial, in which a priest and an imam meet for a cup of tea, was top of the list, ad-tracking firm Ace Metrix found.

Not coincidentally, Amazon, which increased its linear TV ad spending by 76% over last year, according to tracking firm MediaRadar, reported that 2016 was its best holiday shopping season yet.

Other strong holiday performers included Hallmark's spot about extraordinary people from 2016, and Kohl's ad in which a store associate in the jewelry department becomes Mrs. Claus.

"People are just worn out and rather than get into anything controversial, it was all about inclusion and building bridges and giving back," said Peter Daboll, chief executive at Ace Metrix.

To win over customers, retailers will need to keep pushing inclusion, authenticity and distinctive points of view in their marketing, experts said.

"These retail brands have really got to stand for something," said Mr. Daboll. "We're going to continue to see these retail brands doing emotional-connection ads going forward."

"[The season] ended on an up note," said Richard Jaffe, retail analyst at Stifel Nicolaus

In this article: