This week's Nasdaq Advisory Services commentary features Jonathan Eyl, Retail & Consumer Analyst at Nasdaq and his brief findings after investigating the 2014 retail trends with relation to the Same-Store Sales report, released earlier today. Watch our brief video below to learn more!
Overall, we noticed a robust holiday season from a consumer standpoint compared to last year. Consumer confidence increased, mall traffic improved, and gas prices fell drastically. Moreover, retailers scaled back on promotions, as the industry appears to be re-training the consumer, who has become accustomed to a virtually endless promotional landscape. These data points painted a rosier picture heading into December for the consumer and, as we can see from the same store sales figures that were just released this morning, proved to be fruitful for the retailers that reported these figures so far.
Generally, retailers have been more diligent at maintaining leaner inventory levels and do not have to deal with higher cotton prices that have now become a tailwind. We have seen these positives help mitigate margin erosion; however, we also call to light the increased offering of free shipping, as retailers battle for e-commerce share. Since only a few retailers still report same store sales on a monthly basis, investors will be watching the quarterly holiday sales figures due out within the next few weeks very closely for a more holistic view of the sector.
Looking ahead, 2015 makes for a year filled with further changes for retailers, as the economy continues to strengthen and the consumer feels these positive effects. We see retailers needing to enact judicious expansions, close stores where necessary, and expand their e-commerce segments with an Omni-channel focus in mind.
Lastly, we have seen management changes across the sector brought on by both internal and external pressures. With that said, it is important to recognize the possibility of further activist campaigns, coupled with the notion of room for additional industry consolidation, which will be in focus as we welcome the New Year.