For the second month in a row, the Dealerscope CE Retail Confidence Index (DS Index) experienced a dropoff in confidence. The March survey turned out an overall score of 185.27, down just 3.6 points from a month ago, but marking the first time that the DS Index didn’t follow a year-over-year raise/decline trend. Last year, the DS Index was able to bounce back after the February decline. However, 2018 saw retailers’ confidence continue to trend downward in the third month of the year.
Of note in the March survey, a large majority of retailers—particularly independent stores—offered anecdotal evidence that foot traffic has been noticeably sluggish during the first few months of the year. And that has resulted in slower than expected sales and, thus, a drop in overall confidence.
As one retailer put it, the sluggish start to 2018 could be the result of a better-than-expected holiday shopping season. “Consumers are still ‘hung over’ from record holiday spending,” they said. “And there are no major holidays to hang promotions on right now.”
A quick glance at the way store-specific confidence levels are tracking shows us that independent retailers are the main source of the downturn in overall confidence for the DS Index. Since the start of the year, all retail types have seen a drop in confidence, but independent retailer confidence is down nearly 30 points, compared to just 4 points for regional chains and 21 points for big box. Independents also account for nearly 60 percent of the survey base, so the weight of that 30 point drop hangs a little heavier over the actual DS Index score than with other store types.
For those CE retailers who are positive heading into the spring months, they note that March is when business really starts to pick up—especially in terms of in-home projects.
“March is when consumers start remodeling and adding additions onto their houses,” one retailer said. “This will create A/V, appliances, and furniture sales. Additionally, March madness will drive TV sales this month, and we should see 12V sales pick up with boats and car equipment.”
Sales Still Struggling
Following the sharp turnaround in sales performance that was reported last month, CE retailers again reported a weaker month in sales in January. It was another near 50-50 split for those retailers who missed their goal vs. those who hit or exceeded it. All big box stores who participated in the March survey said they missed their most recent sales goal and 50 percent of independents reported missing theirs.
Regional chains, though, bucked this trend in the DS Index as well. Just over 70 percent of the regional stores surveyed said they exceeded their sales goals for the month of January, which was a more-than 20 percent increase over last month. Additionally, just 14 percent said they missed their sales goal, which was the lowest total recorded to date for the mid-tier retail channel.
Perspective on Products
It was another down month for individual product categories. The overall by-product confidence level for March was a 6.58 on a 1-10 scale, down from 6.91 in February. Individually, 11 of the 13 categories the DS Index surveys for experienced a decrease in confidence, one stayed flat (gaming), and one experienced a slight increase (smartphones).
In the grand scheme of the by-product portion of our survey, though, things aren’t as bad as they might seem. Since the start of 2018, despite the drop in by-product confidence, 10 of the 13 categories have actually seen their history-to-date average continue to increase. The changes, granted, have been incremental one way or the other, but it’s still important for retailers to keep things in perspective and think bigger picture.
Looking ahead, Dealerscope anticipates that the industry will right itself and experience a confidence increase. We also anticipate that the months-long decline experienced in 2017—which began last spring—will not make an appearance in 2018.