Traffic at U.S. Malls Drops 7.4%
Retailers opened early during the Thanksgiving break and offered steep discounts, but weekend mall traffic nationwide was 7.4% below year-ago levels, according to a widely watched survey released Monday. Department stores generally suffered the biggest declines.
The survey is worrisome for mall-based retailers because it could signal that recession-wary consumers are reining in holiday spending.
The findings support preseason predictions that discount retailers, warehouse-style operators and other value-oriented stores not typically located in malls will fare better because of their lower prices.
The survey, if it indeed signals sluggish consumer spending, also suggests that consumers may not provide much of a boost to lift the economy out of a recession that was officially declared Monday to have started in March. Consumer spending typically is two-thirds of the nation’s total economic activity.
Retail industry observers say the survey can be misleading, however. Mall traffic Friday, for example, was 0.8% higher than traffic counts generated the day after Thanksgiving in 1999. That holiday season ended up setting sales records across the board.
The first weekend of the holiday shopping season is an important harbinger. It traditionally serves as a scouting opportunity for consumers who use the Friday after Thanksgiving and the subsequent weekend to search for gifts to be purchased later in the season. The drop in traffic could mean that many shoppers already have written off mall-based operators and instead will shop at less costly stores.
Mall traffic fell to 134.4 million visitors, down from 145.1 million during the 2000 Thanksgiving weekend, according to RCT Systems Inc., a Chicago-based market research firm that provides traffic data to the National Retail Federation and the International Council of Shopping Centers. The survey measures how many shoppers enter specialty stores and malls; consumers often are counted several times during lengthy shopping trips.
Traffic at department stores inside malls, which are expected to lag behind discounters because of the recession that became official Monday, fell by 11.7% during the weekend to 151.2 million shoppers, according to RCT’s National Retail Traffic Index. Discounters generally fared better, with Wal-Mart Stores reporting a single-day sales record of $1.25 billion on Friday.
Though uncertain how consumers will react to the stalled economy, growing unemployment and the terrorist attacks, retailers are putting a positive spin on the traffic drop and are sticking with predictions of modest overall gains this holiday season. The National Retail Federation is sticking with its prediction that holiday sales through stores, catalog operators and online retailers will grow by 2.5% over last year’s $200-billion total.
“Although [weekend] traffic in malls and department stores was down from last year, it’s a bit above where it was in 1999, which was a great holiday for retail,” said NRF spokeswoman Sarah Scheuer. “In a season that’s something of an anomaly, the weekend’s figures are encouraging.”
Retailers also took solace from a report by Telecheck Services Inc., which showed a 2.3% gain in same-store retail sales over the holiday weekend. The check acceptance company said the weekend is on track with the company’s prediction of a 2% overall holiday sales increase. The Houston-based company bases its annual predictions on a retail index that is based upon checks written by consumers at more than 27,000 locations.
But other industry observers say the holiday season will be grim for many retailers.
“It’s not a pretty picture,” said retail analyst Kurt Barnard, of Barnard’s Retail Trend Report. “And, on top of everything we’ve seen so far, we learned [Monday] that the country is, indeed, in a recession. The discount stores, the low-priced stores are the bright spot in this picture. They’re the ones raking in the sales.”
Fewer Consumers in Mall-Based Stores
“What we didn’t see this past weekend was traffic in malls,” Barnard said. “We didn’t see enough retail sales by department stores, by specialty apparel stores. What we did see was a huge defection of shoppers from major malls to strip and power centers where discounters reign supreme.”
Wal-Mart’s single-day sales record was driven by consumers who took home electronics, toys, small appliances and hardware. Sales at stores open for at least a year, an important retail industry yardstick, were up “in the single-digit range,” according to the company’s weekly sales report. Although sales were soft during the first part of last week, sales “picked up slowly as we moved toward the holiday,” according to Wal-Mart.
Sales at Sears stores open for at least a year “increased slightly on Friday and Saturday,” company spokeswoman Peggy Palter said Monday. “We were pleased as far as what we saw during the weekend as a whole ... the trends we saw were not unexpected.” Sears reported strong consumer interest in electronics, home appliances, lawn and garden merchandise and footwear.
Sears shoppers also homed in on “family-oriented gifts, things like pool and ping-pong tables, Foosball and other game tables,” Palter said. “Store managers are telling us people are looking for family-oriented gifts, things the whole family can play with.”
Store operators say uncommonly warm weather in many parts of the country hurt sales of winter apparel, traditionally a strong attraction during holiday seasons. Retailers say the storms that dumped measurable amounts of snow on Utah and other Western states could help to spark stronger sales of cold-weather gear.Retailers also hope to catch a break from a quirk of the calendar that delivers 32 shopping days between Thanksgiving and Christmas, up from 31 last year. Optimists say consumers will use the added day to spend. But others note that 1990, the last year with a 32-day shopping season, left many retailers disappointed.
Weekend-to-Weekend Numbers Heartening
RCT Systems Vice President Jim Martin said the weekend numbers represent a positive development for mall-based retailers on a weekend-to-weekend basis.
Customer traffic increased by 36.5% during the weekend ended Nov. 25 compared with the weekend ended Nov. 18; a year ago, the weekend-to-weekend increase was 34.5%
“I suspect many retail executives are breathing a bit easier,” Martin said. “Given the current economic and political environment, and traffic trends leading into Thanksgiving, total traffic numbers certainly could have been lower.”
Online shopping showed an uptick, driven by heavily promoted online sales and the promise of free shipping, according to Nielsen/NetRatings.
Internet traffic to Web-based retailers grew by 22% on Friday, compared with the three days before Thanksgiving. However, last year’s day-after-Thanksgiving increase over the three-day period earlier in the week was 27%, according to NetRatings.
And when shoppers went online, they were increasingly visiting online units of real-world retailers. Amazon.com’s Web site led the way with 1.7 million visitors Friday, but the top five list was rounded out by such retailers as Walmart.com and Target.com.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Slower Shopping Traffic
Shoppers went to malls over the weekend, but in fewer numbers than during the 2000 Thanksgiving weekend . . .
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Shoppers (in millions) Pct. change Day 1999 2000 2001 2000 to 2001 Friday 61.6 67.6 62.1 -8.1% Saturday 47.3 49.0 45.7 -6.7 Sunday 27.3 28.5 26.6 -6.7 Total 136.2 145.1 134.4 -7.4
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. . . with department stores inside malls suffering steep traffic drops.
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Shoppers (in millions) Pct. change Day 1999 2000 2001 2000 to 2001 Friday 76.8 83.1 72.7 -12.5% Saturday 56.6 56.8 50.2 -11.6 Sunday 31.1 31.4 28.3 -9.9 Total 164.5 171.3 151.2 -11.7
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Source: RCT Systems
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Online Favorites
Virtual department stores drew heavy traffic Friday.
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Visitors Store (millions) Amazon.com 1.70 Walmart.com 0.34 Target.com 0.31 Kmart.com 0.23 Sears.com 0.22 JCPenney.com 0.22
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Source: Nielsen/NetRatings
