Declining retail traffic is being blamed on bad weather for the second year, but there are some signs that retailers are starting to stabilize
This time last year, the big story in retail was that a bitter winter was keeping customers away, but last week same-store retail traffic was even worse and companies are again pointing to heavy snowfall as the culprit. The good news is that retailers may finally be pushing back toward positive same-store traffic growth, and apparel stores are already on the upswing.
“We believe weather was primary culprit as 2 significant snowstorms impacted the Northeast,” write Cowen analysts Oliver Chen and Steven Zaccone. “Less snow for Feb Wk 3, but still cold in East; west warm & dry.”
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Retail traffic may finally be stabilizing
The trouble with the claim that Northeastern storms caused the drop in retail traffic is that numbers fell in every part of the country – even if weather aggravated the situation there’s no reason to think that traffic would have picked up otherwise. The Northeast was actually the second best region for retailers, and even if the South had a colder winter than usual it didn’t have the blizzard-like conditions that would make it impossible for people to get out to shop.
Same-store traffic did increase slightly year-on-year in the first week of February, but that’s mostly due to last year’s especially bad first week in February as you can see from the two-year stacks, so any optimism should be fairly muted.
If you exclude holiday promotions, retail traffic has been in continuous decline for the last two years, barely scratching the surface of growth earlier this month but trending upward nonetheless. Hopefully that means retailers are stabilizing and starting to benefit from wage growth. If bullish forecasts on the economy hold, retailers could see their business pick back up as the average person finally starts to feel the effects of the economic recovery.
Apparel enters fourth week of traffic growth
The real bright spot was that apparels had their fourth consecutive week of traffic growth. Excluding holidays and their heavy promotions, apparel retailers have had declining traffic for the last two years so it’s a good sign even if they are building on a significantly weaker base. Electronics traffic, which exploded after the release of Apple’s iPhone 6, has fallen into negative numbers again in recent weeks.