Specialty Retail Pulse, Winter 2013
Glossary of Definitions
CY - Calendar Year
RMU - Retail Merchandise Unit - A mobile unit which is staffed from the outside like a pushcart. It may be square, rectangular, round or elliptical. Many RMUs include large display areas, ample storage, lighting and security features.
Share - Total share of specialty retail sales
Mall Kiosk - A store of varying size and shape, which is typically enclosed with the operator located in the center and the customer approaching the vendor from across a counter.
Mall Cart - A store of varying size and shape with the operator and customer transacting business outside of the unit.
Inline - A space located within a center’s gross-leasable area (as opposed to the common area, parking lot, roof or peripheral land.)
Vending - A non-staffed unit from which goods or services are purchased by means of coins, bills, credit cards or debit cards.
This issue of Specialty Retail Pulse focuses on Q2 2012 sales data with a comparison to Q2 results for 2009, 2010 and 2011. As with previous reports, this issue explores indicators of possible emerging trends; which categories are leaders in terms of sales and unit growth; and whether or not there are shifts in unit types – i.e. carts to kiosks, kiosks to inline, etc. Additionally, this issue looks specifically at trends within the Food and Home Décor and Accessories categories.
Q2 2012 vs. Q2 2011 Summary
A Quarterly Performance Report Exclusively for the Specialty Retail IndustryOverall Sales Change: -1.9%
Overall Change in Number of Units: -6.7%
Average Q2 Sales Per Center: $492,953 ($164,318/month)
Average Q2 Sales Per Unit: $21,350 ($7,117/month)
Number of Specialty Units Per Center: 23 (Average/Month Q2)
Q2 2012 Sales Down 2% Compared to Q2 2011
Specialty retail sales for the three-month period ended June 30, 2012, were lower compared to Q2 2011, but up 3.4% compared to Q1 2012. Overall year-to-date sales are down 5% compared to the same six-month period in 2011.
As noted in the Q1 report, one factor behind the comparable quarterly sales decrease is the lower number of specialty retail units per center compared to Q2 2011. The average number of specialty retail units per center has dropped from 25 in Q2 2011 to 23 in Q2 2012. Despite both the overall sales decrease and the decrease in the number of total units, per unit productivity continues to improve. The average sales per unit in Q2 increased by 5% compared to Q2 2011, from $20,301 to $21,351 for the quarter. (By comparison, Q1 sales per unit were $20,329.)
Year-To-Date (Q1 + Q2) Top 10 Sales Categories
Through the end of June, the top 10 categories accounted for 73% of all specialty retail sales – down from 76% for the same period in 2011, and more closely aligned with Q2 results in 2010 and 2009. The Amusement category, which had been in the Top 10 since 2009, was edged out by Personal and Professional Services (reported above as a combined Services category). Compared to Q2 2011, the Amusement category saw a 1% decrease in the number of reporting units and 23% decrease in total sales.
Among the Top 10 categories, the Personal Care and Health category captured its largest share of total sales (11%) in the four years sales have been tracked —despite a slight (2%) overall sales decline compared to Q2 2011. The share of sales rank of the Personal Care and Health category has been positively impacted by both an increase in the number of units (resulting in higher total sales) and by sales declines in other Top 10 categories. The average number of Personal Care and Health units per center in Q2 was six – up from just three units per center in Q2 2009. Sales per unit in the Personal Care and Health category were $8,570 for Q2 vs. $12,452 in Q2 2011—a per unit decrease that results for a 42% increase in the number of reporting units.
Compared to Q2 2011, six of the Top 10 categories saw sales increases, with only Personal Care and Health, Fashion Accessories, Jewelry and Personal Services seeing a sales decrease. After several quarters of sales decreases, the Apparel category was a particularly bright spot when compared to Q1 2011, with an overall 12% sales increase. This growth has been spurred by per unit sales growth – not by the number of units per center which slipped from 4.2 in Q1 to 4.0 in Q2. The average monthly sales per unit for the Apparel category in Q2 was $6,173 – up from $5,829 in Q1 and from $5,352 in Q2 2011.
The sales decrease seen in the Fashion Accessories, Jewelry and Personal Services categories were driven by a decrease in the number of reporting units compared to Q2 2011. (See detail below.)
Apparel Category and Cellphone/Accessories Category Continue to Top the List for Share of Q2 Sales
As they have since Q1 2009, the Apparel category and the Cellphone and Accessories category continue to lead all other categories in terms of their share of overall specialty retail sales. This quarter the share of sales garnered by the Apparel and Accessories category reached 15%. (This category peaked at 19% in Q1 2010.) As reported in Q1, the share of sales garnered by the Cellphone and Accessories category has progressively edged upward and now stands at 13%. The average per unit sales for the Cellphone and Accessory category were $12,705 in Q1.
A review of category performance since 2009 provides a barometer by which it may be possible to identify categories that are showing signs of vigor – and those that may be maturing – or perhaps pausing before resuming their upward trajectory.
Performance Indicative of Growth in 2012
In Q1, the categories cited as showing signs of the strongest growth for 2012 were: Holiday, Stationery/Cards/Calendars and Home Décor and Accessories. Of these, the Stationery/Cards/Calendars category, and the Home Décor and Accessories category are continuing to show positive sales and unit growth in Q2, while the holiday category has softened this quarter. (See detailed Home Décor and Accessories analysis later in this report.)
In addition to these growing categories, two others showed strong growth over Q2 2011. The Professional Services category and the Events/Entertainment category each saw sales and unit increases over Q2 2011, and will be tracked as potential growth categories through the remainder of the year.
Performance Indicative of Maturation
Categories cited for their slower growth and/or sales and unit declines were the Cellphone and Accessories category, the Pet Products category and the Sporting Goods category. Of these, the Cellphone and Accessories category continues to be flat in terms of sales and unit growth in Q2. However, the September introduction of the iPhone5 is expected to jumpstart category growth again in Q4. The other two categories, however, each showed renewed strength in Q2 with total sales in the Pet Products category up 56% over Q2 2011, and the Sporting Goods category up 19% over Q2 2011.
Sales by Unit Type
Inline retail units represent a slight majority of all specialty retail sales in Q2 2012. Within this unit type, four categories represent 70% of all sales. (Apparel 40%; Home Décor and Accessories 14%; Toys and Games 8%; and Fashion Accessories 7%.)
Sales within the Carts unit type are much more segmented with seven categories representing 70% of sales. (Personal Care and Health 19%; Cellphone and Accessories 17%; Jewelry 9%; Fashion Accessories 8%; Sunglasses/Eyewear 7%; Food 5%; and Bath Body and Fragrance 4%.)
Sales within the vending category have grown from less than 1% in Q2 2009 to nearly 3% in Q2 2012. Though a much smaller segment, vending units have a notably different mix of categories with Amusements and Food combining for 58% of sales.
Q2 Category Focus: Food and Home Accessories and Décor
Each quarter, Specialty Retail Pulse looks at trends within specific categories. This quarter the focus is on the Food category and the Home Accessories and Décor category. In Q2, the Food category ranked 5th in terms of its overall share of total sales, while the Home Décor and Accessories category ranked 7th. The Food category captures 7% of total sales vs. 5% for the Home Décor and Accessories category. In Q2 2012, each category achieved their highest share of sales for the period since tracking began in 2009.
Compared to Q2 2011, both categories saw an overall sales increase for the period ending June 30, 2012. Total sales in the Food category were up 14% and total sales in the Home Décor and Accessories category were up an even stronger 37%. The sales increase in the Food category was driven by a 38% increase in the number of units, which resulted in lower per unit sales compared to Q2 2011 ($5,918 vs. $4,873). The overall increase in the Home Décor and Accessories category was achieved through increased productivity per unit. Quarterly sales per unit in the Home Décor and Accessories category were up 26% over Q2 2011($15,959 vs. $11,828).
Specialty Retail Pulse provides top-level benchmark comparisons for the specialty retail industry in North American regional and super-regional shopping centers. The findings are compiled from developers and retailers who have agreed to participate in a “blind co-op” by providing specialty retail sales, lease terms and other rental rate details. Through analysis of nearly 6,000 individual tenant records totaling more than $2.2 billion in specialty retail sales, Specialty Retail Pulse establishes key industry benchmarks. This movement from anecdotal to quantified data allows both developers and entrepreneurs to gauge their performance and growth against industry standards. Data is reviewed and updated quarterly. When compared to prior quarters, individual data points may vary.
Specialty Retail Pulse is a cooperative effort of Specialty Retail Report and Alexander Babbage, Inc.
Alexander Babbage, Inc. is a full-service strategy and market research firm providing research and consulting services to shopping centers, retailers, cities, towns, business improvement districts (BIDs), community improvement districts (CIDs), transit oriented developments (TODs), professional sports teams and entertainment destinations. The company is known for its use of leading edge technology to reduce costs, improve turnaround time and maximize insights for each of its clients. For more information, please visit alexanderbabbage.com
Research sponsored by Max James Family Foundation.