The Big Picture
As we wrap up the year, the economy continues to improve. The unemployment rate fell in November, and the stock market recently reached new highs on news that the Federal Reserve will start trimming back interest rates next year. This will lower borrowing costs, potentially giving both businesses and the housing market a boost.
An early look at holiday sales also brings good tidings. According to MasterCard SpendingPulse, overall retail sales increased 3.1% from Nov. 1st to Dec. 24th. However, the sales momentum did slow from 2022, when a 3.7% jump was recorded for the same period.
The highest gains this year came in restaurant spending, but apparel was another popular category, posting a 2.4% increase over last year.
Nov. Sales & Dec. Update
The Christmas boost came after a mixed November in our client stores. Menswear was down 3% overall last month, while women’s wear dropped by 1%. This caps a year in which menswear did better for the most part.
But, last minute gains in women’s ready-to-wear boosted their November performance, just as sales of men’s Suits and other Clothing items finally fell. Suits were down 5% last month, which was not too surprising given that they have had a good run for the last two years.
Anecdotally, many of our clients reported a sales spike in December, which should leave them with cash on hand at the end of the year.
2024 Planning
It was clear to us that early deliveries resulted in big gains for many of our clients this fall. Now is the time to reflect on the timeliness of your deliveries. How can you improve them for next year?
It’s also time to get serious about driving down any excess inventory, since we have been flashing a yellow warning signal about this for months. We proved during the pandemic that merchants could make money, even when running leaner stock positions.
We are predicting low, single-digit growth for 2024, and that won’t create enough traffic to clear out a lot of aged inventory. Discuss your markdown plans with you analyst. Any aged inventory sold after January will likely require discounts that leave you in the red on those items.
While we expect a soft start to 2024, we do predict a pickup by early mid-spring. Get your seasonal categories ready (like Dresses for women and Casual Jackets for men) and plan for a good year.
Like this fall, early new deliveries should drive demand.
Blacks’ Bottom Line
Reflect on what worked this year, and what didn’t. Incremental improvements will deliver incremental change. Accelerate your improvements to grow faster.