Holiday season defines winners, losers in retail
NEW YORK — The 2018 holiday season turned out to be a mixed bag for retailers, with some of them defying a gloomy government report in December that raised concerns that shoppers were hunkering down everywhere.
2019 is expected to be challenging as economic growth is expected to slow. The once-strong housing market is cooling. And smaller tax refunds could put a damper on the current quarter results, hurting sales of big ticket items like TVs.
“If you are sitting in the mall and you are watching all the stores closing around you, it has to be disheartening,” said Ken Perkins, president of Retail Metrics, a retail research firm. “But there are a handful of big box stores that will be able to weather any downturn. They have the capital to pick up market share as others struggle.”
Here’s a closer look at the winners and losers:
Off-price stores to remain strong
Off-priced chains gained market share and expanded rapidly during the depths of the Great Recession and stayed strong during the economic recovery. Retail consultant Craig Johnson doesn’t see their fortunes fading anytime soon.
TJX Cos., which operates T.J. Maxx, Marshalls and HomeGoods, posted a 6 percent increase in sales at stores opened at least a year for the fiscal fourth quarter as more shoppers walked through their doors.
The off-price concept has been a bright spot at Macy’s and Nordstrom.
Muddling the middle
Mall-based clothing chains such as Gap as well as mid-priced department stores including J.C. Penney haven’t benefited from a strong economy because they haven’t differentiated themselves from a sea of sameness, Perkins said.
Many are continuing to try to shrink their way to profitability.
Meanwhile, a number of retailers have filed for bankruptcy in the first two months of this year, including Charlotte Russe, Gymboree and Payless ShoeSource. Late last month, Payless filed for Chapter 11 for the second time, and is liquidating all 2,500 of its U.S. stores. Gymboree is closing all of its roughly 900 stores, including its Crazy 8 stores.
Fortunes for home improvement business
Lowe’s and Home Depot saw sales slow down in the fourth quarter amid an overall housing slowdown. The Commerce Department recently reported the number of homes being built in December plunged to the lowest level in more than two years, potentially signaling that developers expect fewer home sales this year.
But Perkins believes that in a slowing housing market, home improvement chains can still weather the slowdown.
“People may not be buying homes, but they’ll stay and renovate,” Perkins said.