Big Box Stores Set Record High in Last DS Index Report of 2018
December brought on another solid month of growth for the Dealerscope CE Retail Confidence Index (DS Index). Retailers in this month’s survey checked in with a confidence score of 203.58, up just shy of 5 points month-over-month, and more than 4 points higher year-over-year. This also marks the second time that the DS Index has broken the 200-point threshold this year, the first time retailers have done that in a single calendar year in the survey’s history.
The latest DS Index report and strong growth for the retail industry’s confidence level comes on the tails of what was a stronger-than-expected Black Friday holiday shopping weekend. Retailers saw tremendous spending all weekend long, and particularly in the ecommerce arena, with consumers dropping an estimated $24.2 billion in online sales over the weekend—including $7.9 billion on Cyber Monday alone, a single-day U.S. online sales record.
According to the National Retail Federation’s research, foot traffic and total average spend per customer was down slightly year-over-year. But the retail group said it was very confident that the season would still set retail records, due to the amount of consumers who reported that they still had a majority of their holiday shopping to do, even after the Black Friday weekend.
“The economy has been steadily stronger, each month it seems more like 2005-06 growth of new projects and customers adding new products,” one retailer said in response to the survey and their holiday performance outlook.
The December DS Index increase was driven by a lot of different factors, but perhaps one of the most surprising was the absolutely incredible performance of the Big Box retail segment. During this most critical time of the retail calendar, Big Box stores reported an all-time record high in December. Their 231.42 confidence score this month was the single-highest confidence score ever recorded, be it by an individual retail store type or the overall DS Index. The previous record was set by the Regional retail channel with their 219.37 score that set the tone back in January.
Big Box’s strong surge since bottoming out back in August is a bright spot for a segment that has otherwise dealt with a rough second half od 2018, with the going-out of Toys R Us and the bankruptcy announcement of Sears. This surge though—and some other results in this month’s survey—brought about a few interesting factoids:
- This is the first time this year that the Regional segment ranked lowest in overall confidence.
- Independent chains pulled in their second-ever 200-plus point month. It just so happens they did it in back-to-back months.
- Regional retailers, which have been the most consistent over the past year, have trended downward as we get close to the new year.
“It could go either way,” one retailer said. “Money and budgets may be tight for some people around the holidays, so if the product is not something the consumer plans to gift, and it is a want rather than a need personally, they will not spend the extra money, whereas some people may buy the product as a gift for the holidays.”
And to that retailer’s point, consumers have seemingly been ready to spend this year. Retailers’ sales performance over the previous six months speaks to that sentiment, as nearly three quarters of those surveyed reported either hitting or exceeding their sales goals in September and October. That data point has continued to trend up, and if retailers’ confidence from the past two months translates into sales, we could see some of the strongest sales goal performance ever in our DS Index survey as we move into 2019.
The improved store type performance was just a part of what helped the December DS Index score rise to the level it did. Products continued to show large gains on a month-over-month basis, according to the December results.
In December, only two product categories (Audio and Car Tech) experienced declines in monthly confidence. The rest improved from November to December, and the average increase was an impressive 0.79 points. That performance was lead by Headphones, which jumped 1.11 points from November to December—a very likely category given their immense popularity as a wish-list item during the holidays. Additionally, VR (up 1.08 points), Connected Home (up 1.02 points), and Video/TVs (up 0.97 points) experienced some of the largest gains in December.
Looked at on an annual basis, there was positive news for every single product category this year. For all 13 product categories, their 2018 average confidence level ranked higher than their lifetime confidence level. The most improved product categories this year included Digital Imaging, Wearables, Emerging Tech, and Gaming.
A quick look back at the DS Index and general retail news coverage from this past year, it’s clear to us that the industry experienced a stronger than expected 2018. After a year in which the retail apocalypse was a constant theme (that being 2017), it’s nice to see the industry bounce back, the economy improve, and overall performance actually get better. There are plenty of reasons to be cautious about similarly strong retail results in 2019—particularly given the uncertainty surrounding international trade policy—but this past year has set our industry up for what could be another better-than-expected year next year.