While this edition of Pulse is part of the spring issue, future data reports will only be made available to members of SRR’s new Specialty Retail Association. To find out more about joining this valuable industry network, please visit specialtyretailassociation.com.
In This Report
In addition to the 2011 year-end summary, this issue of Specialty Retail Pulse provides a first-time look at three full years (2009, 2010 and 2011) of specialty retail sales data. What are the trends for the industry as a whole? Which categories are growing? Which have reached maturity? Are there signs of growth – and if so, which categories are poised to experience it? Now, with 36 months of data, objective metrics provide the answers.
This issue also provides a summary of Q4 results with a summary of holiday sales performance (November and December).
CY 2011 Sales Down 5.6% Compared to CY 2010
Specialty retail sales for the 12-month period ending December, 2011, were down 5.6% compared to CY 2010. Year-end sales were down 3.7% compared to CY 2009. The decrease in 2011 appears to be the result of two trending factors – fewer overall specialty retail units per center (in 2010 the average number of units per center was 28 vs. 26 units per center in 2011) and a downward sales trend in key categories such as apparel (down 10% for the year compared to 2010) and bath, body and fragrance (down 16% compared to 2010).
While representing a smaller segment of overall sales, other categories such as collectibles and music/books/movies also showed sales declines versus 2010. Sales in the collectibles category were down 20% compared to 2010 and music/books/movie category sales were down 29% compared to 2010. In tandem with this decline in sales within the shopping center setting, sales in these two categories – especially the music/books/movie category – are becoming an ever-increasing portion of online sales. According to the U.S. Census Bureau, online sales of music and videos currently account for 74% of all sales in this category, and online sales of books and magazines account for 61% of all sales in this category.
Despite an overall sales decrease, some categories were notably up during CY 2011. Among the industry’s top-producing categories, both the amusements category and the personal care and health category saw sales increases of 14.3% and13.5% respectively, or almost 14% compared to 2010. Boosted by a 43% increase in units compared to 2010 and by strong sales increases during the first nine months of the year, the toys and games category also enjoyed a sales increase of 8% compared to 2010. Despite an overall sales decrease, some categories were notably up during CY 2011. Among the industry’s top-producing categories, both the amusements category and the personal care and health category saw sales increases of 14% compared to 2010. Boosted by a 43% increase in units compared to 2010 and by strong sales increases during the first nine months of the year, the toys and games category also enjoyed a sales increase of 8% compared to 2010.
When reviewed by all categories – not just the top sales producers – some of the industry’s smaller categories also experienced significant growth in 2011. While some of these fast-growing categories currently represent less than 1% of all annual sales, their 2011 performance may be indicative of future growth opportunities.
Q4 Sales Decreasing Year-on-Year as Share of Annual Sales
As a percentage of annual sales, the fourth quarter has trended downward since 2009; conversely, as the first six months of the year have trended upward – January and March have seen the greatest increase in share of annual sales when compared to 2009. In 2009, Q4 sales represented 42.3% of annual sales. This slipped to 40.9% in 2010 and in Q4 2011 sales represented 39.5% of the annual total. Compared to 2009, December has seen the most significant share decrease. In 2009, December sales represented 23.2% of annual sales.
In 2011, December represented 21.4% of total year sales.
Q4 – Apparel and Cellphones/Accessories Categories Continue to Top the List for Share of Q4 Sales
Overall Q4 sales were essentially flat (down just 1%) when compared to 2010. When compared to 2010 and 2009, the Top 10 category lineup by percentage of Q4 total sales remains nearly identical for the same timeframe. Compared to Q4 2010, only the jewelry category dropped from the Top 10 list, with the holiday category (which saw very strong October sales) taking its place.
When reviewed at the category level, Q4 sales trends show several interesting differences compared to the year overall. For example the apparel category, which has been losing its share of annual sales, appears to be gaining its share of Q4 and holiday sales. Apparel, which experienced a year-on-year decline in both its number of units and overall sales, saw a Q4 increase of 4.1%. The increase was driven by a particularly strong December increase of 5.1% over December 2010 sales. Conversely, the toys category which saw 8% sales growth and a 43% increase in its number of units for the year, experienced a significant sales decrease in Q4 sales. Compared to 2010, sales in the toys category were down 20.5% in Q4, and 18.6% in December.
As a whole, the Top 10 categories maintained their overall share of Q4 sales when compared to 2010 and with an increase in share of 1% over 2009. The apparel category saw the largest gain in share (just more than percentage point over its 2010 share of Q4 sales) while the bath, body and fragrance category saw the greatest decrease in its share (5.8% in 2011 vs. 7.5% in 2010). Overall, the Top 10 categories are maintaining – and in some cases strengthening – their share of total sales. This indicates a consolidation of sales within these categories and a strengthening of sales despite a reduction in unit which results in an overall smaller “footprint.” In essence, these categories appear to be functioning as “anchors” for the other unit types in much the same way that anchor department stores are the cornerstones for the shopping center as a whole.
The Q4 Top 10 categories (by total sales) represent 71.8% of all Q4 sales.
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.
About Specialty Retail Pulse
Specialty Retail Pulse was launched to provide sales and performance metrics across a variety of product categories and shopping centers. Instead of piecemeal data, we believe comprehensive benchmark performance data can yield a better snapshot for where sales trends are headed and allow individual retailers to modify business strategies accordingly.
Specialty Retail Pulse is a cooperative effort of Specialty Retail Report and Alexander Babbage, Inc.
Research sponsored by Max James Family Foundation.
Future editions of Pulse will only be made available to members of the Specialty Retail Association. For more information about membership and its privileges, visit specialtyretailassociation.com.