Online business among traditional brick-and-mortar retailers has picked up significantly in the beginning of 2013. Walmart just released their earnings report for Q2 2013 showing a +30% increase in online sales and Kohl’s earnings report showed a +28% sales increase (although slower than a couple of previous quarter, still a formidable growth rate).
But Retail is up for a little headwind in the holiday season in 2013. With Thanksgiving being 6 days later than in 2012, the calendar effect is predicted to be significant.
A forecast that CommerceHub put together shows that retailers could risk approx. 4% less growth this year due to the calendar effect. This impact will be more visible for brick-and-mortar stores and their sales comps versus last year, as we continue to see very high growth rates for online retail (that likely will cover up the calendar impact).
(The table shows that the calendar effect on Total Holiday GMV could be as much as -4.3%, with a significant shift of GMV from Nov to Dec. PBF AtA = Post Plack Friday Apples to Apples)
The Thanksgiving to Christmas Eve period (29th of Nov to 24th of Dec) in 2013 is expected to be particularly important compared to last year, as more sales leading up to Christmas Day becomes condensed over a shorter period of time.
If the same store sales (SSS) numbers start to come in short prior to Thanksgiving – due to for example warm weather – we might seeing some unplanned deep discounts in the Black Friday & Cyber Monday period to bolster back sales.
Big Retailers Are ‘Conservative’
Many retailers have acknowledged the calendar effect when discussing the 2013 Holiday forecast.
Kevin Mansell, Chairman, President and CEO of Kohl’s said, that they’re being “somewhat conservative as we look at the holiday season because there is a shorter number of days between Thanksgiving and Christmas” (Kohl’s Earnings Call Q2, 2013).
Craig Menear, EVP, Merchandising of Home Depot was acknowledging the same challenge; – ”As we get to the fourth quarter, the holiday shopping season will be a week shorter due to the date on which Thanksgiving falls this year.” (Home Depot Earnings Call Q2, 2013)
Combating the calendar effect by expanded offering
Not all retailers are as concerned about the calendar effect. Some expect the pieces of the sales pie to be distributed differently across the Nov/Dec period, but that the total pie to remain the same (and show the stable growth that they expect). Others are looking closely at promotional strategies earlier in the year to drive incremental demand sooner in the period.
Many of the retailers that CommerceHub is working with are looking closely at their Merchandising Strategy. Data that CommerceHub put together shows that if you’re a $1.5bn yearly online retailer, you need to be incrementally adding over 100,000 SKUs (136k to be more exact) to your online assortment offering in the Holiday season (Nov/Dec) in order to offset the 2013 Holiday calendar effect.
Here are the Calendar Effect assumptions:
- A 50% Uplift Holiday GMV (after Thanksgiving, excl BF, CM, CE) 50% (this varies greatly by industry though, as our data shows)
- A Q4 share of Total Yearly GMV of ~35%
- A 150% Uplift on CyberMonday
- A 100% Uplift on Black Friday
Here are some assumptions on how to combat the Calendar Effect
- No decline in SKU productivity
- GMV needed (based on -4.3% var.) $17m
- GMV / unique SKU sold for the period $500
- Only 25% of added unique SKUs get a sale in the period