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Saks Fifth CEO says luxurious retail is ‘consolation meals’ throughout pandemic

Saks Fifth CEO says luxury retail is 'comfort food' during pandemic

A pedestrian walks past the Saks Fifth Avenue Inc. women’s shop on Brookfield Place in New York, USA

Allison Joyce | Bloomberg | Getty Images

Marc Metrick, chief executive of Saks Fifth Avenue, said luxury retail was like “comfort food” to some shoppers during the Covid-19 pandemic.

“People were buying things at the height of the pandemic that had no absolute functional end-use, but they love fashion,” Metrick said Thursday during a virtual presentation at the National Retail Federation’s Big Show. “I think what we learned is this [consumers] Think of luxury as retail convenience food. … It was her way of feeling – it was something so much more and so much deeper than a pair of shoes. “

“Why else would you buy 110 millimeter pumps … from a luxury brand when you work at home and at Zoom all day?” he said. “You do it because you love fashion, and it’s your oreo cookie. It’s yours – something that makes you feel better.”

For Saks he added: “That was a proof of concept [that] Fashion will prevail. “

Luxury retailers like LVMH’s high-end department store chain Neiman Marcus and Tiffany reported a similar trend over the past year: wealthy shoppers looking to forego even more for themselves during troubled times. Many of these consumers have spent less money on travel and restaurants because so many social activities were curtailed during the health crisis, and instead called on more designer handbags, diamond rings and extravagant home decor.

Metrick said interest in Saks’ personal shopper service has also increased during the pandemic, partly for safety reasons but also because people are looking for activity.

“When you buy luxury products, you want the experience,” he said. “They don’t want it to be just a transaction.”

A store within a store called “Barneys at Saks” opened earlier this month on the fifth floor of the flagship store on Saks Fifth Avenue in New York City. The department store chain Barneys New York filed for bankruptcy in 2019, but the brand lives on at Saks. Another of these mini-stores is slated to open later this month in Greenwich, Connecticut.

“Business is still important,” said Metrick. “Especially for luxury it is the theater.”

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Business

Retail Gross sales Drop in December for Third Straight Month

Retail Sales Drop in December for Third Straight Month

Consumer spending fell for the third month in a row in December, confirming what many economists had forecast as the disappointing Christmas season for many retailers and restaurants.

Retail sales fell 0.7 percent last month, the Commerce Department said on Friday as the economic recovery showed signs of stagnation and the number of viruses spiked across the country, causing shoppers to shut down stores amid a new wave of Avoid restrictions.

For the second straight month, the decline was worse than predicted by most economists, showing that the deterioration in the overall economy in the final quarter of 2020 was deeper than expected.

“In one line: grim,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, of December retail sales in a research note on Friday.

“We believe the fear of the third wave of Covid and the restrictions imposed across much of the country to suppress it have caused most of the damage to retail sales in the past two months,” he added added.

The decline was widespread in many categories, including electronics, auto, and grocery and beverage stores, which saw high spending last spring and summer but fell towards the end of the year. Restaurant spending fell again in December as cases and closings rose.

The decline most likely also reflects how retailers’ strategies of offering vacation deals early in fall spread the holiday shopping season over months, and may have dampened sales closer to Christmas.

The Commerce Department also revised its November sales data, showing a 1.4 percent drop, larger than the 1.1 percent drop previously reported.

Weaker consumer spending, which accounts for 70 percent of the U.S. economy, adds to the urgency of the $ 1.9 trillion economic bailout proposed by the new administration in Biden this week, which will increase direct payments to individuals by $ 1,400 would increase.

“This is likely the low point for retail sales as the late December incentive and the upcoming incentive under the Biden administration will improve both bank accounts and consumer sentiment,” Robert Frick, corporate economist with Navy Federal Credit Union, said in a Explanation.

However, other economists said Americans would be more likely to save their stimulus money than spend it over the next few months, especially as stores remain closed.

The retailers trade group searched for the bright spots in the trade report, highlighting that vacation shopping was higher last year than it was in 2019, with sales up 8.3 percent.

“With the virus spreading, government restrictions on retailers, and heightened political and economic uncertainty, consumers turned to gifts that lifted the spirits of their families and friends and made them feel normal in the challenging year,” said Matthew Shay, president the National Retail Federation said in a statement.

However, there is evidence that more and more of these sales are going to huge retailers who have been able to use their scale and digital skills to gain larger market share during the pandemic.

One such retailer, Target, said Wednesday that its November and December sales were up 17.2 percent year over year, driven by both in-store and online shopping. Target’s digital revenue was the largest area of ​​growth, more than doubling from the 2019 Christmas season. The vast majority of these deliveries came from Target stores.

Amazon has also said that its Christmas sales hit a record high in 2020 but has not yet provided detailed figures.

Overall, online shopping over the 2020 vacation increased 32 percent year over year to $ 188 billion. However, the weakness in retail sales in December shows that despite the surge in e-commerce, the majority of consumer spending – such as groceries, auto sales, and restaurants – is still in physical environments that remain constrained due to the pandemic.

That reality, Shepherdson said, means that despite the expected stimulus for consumers in the first few weeks of the Biden administration, spending could remain depressed for the next several months.

“We anticipate consumer spending will have problems until the falling Covid cases allow restrictions to be relaxed from March,” he said.

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Vacation gift-card shopping for might assist enhance retail gross sales in 2021: Invoice Simon

Holiday gift-card buying could help boost retail sales in 2021: Bill Simon

This holiday season, gift card spending could spike, and that could help boost retail sales over the next year, former US President and CEO of Walmart Bill Simon told CNBC on Thursday.

Payment service Blackhawk Network found in a survey that shoppers spent an average of around $ 313 on gift cards during the holidays. This is an increase of 19% from the 2019 average. In addition, 52% of respondents said they would likely buy more gift cards in 2020 than in the past.

In a Closing Bell interview, Simon said the increased spending on gift cards could initially have a negative impact on retailers already grappling with the disruption caused by the coronavirus pandemic.

“Gift cards are shaky … because you don’t see the sale when the customer buys the card. You see the sale when it’s actually exchanged,” he said. “So if you try to measure Christmas sales, you will have this liability on the balance sheet, which is not a sale even though the sale was closed.”

However, the impact of gift card purchases could be much more beneficial with a view to the next year, explained Simon, who was President and CEO of Walmart US from 2010 to 2014.

One reason for this is that recipients tend to spend more than the face value of the gift card when shopping. “In general, you see about 20 to 30% more than the gift card,” he said.

The second reason is that, according to Simon, there may be “3% to 5% breakage, which means that cards are not redeemed”. “It’s a bit of a godsend for retailers, but it will also take time for them to finish.”

There could be fluctuations as retailers realize the benefits of buying Christmas gift cards over the next year, Simon said, pointing to the ongoing uncertainty surrounding Covid-19. When asked if retailers could have above-average sales in the first quarter, Simon replied, “They could and should.”

“If people still don’t want to get out, they may not be able to redeem their cards until the second quarter and it can happen later in the year,” said Simon. “But I think what we’re seeing in the increase in gift card shopping seems likely.”