Retail
Holiday Retail: A Boom for Electronics and Apps Sales, a Likely Bust for Apparel
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After unwrapping the new gizmos, the first thing most folks will want to do is to try them out, so they will download an app. Last Christmas Day, 328 million apps were downloaded, a record number that is expected to be surpassed tomorrow. For apps makers large and small, this is a big deal because they expect to get a lot more traffic than normal, and the last thing apps makers want is an Obamacare-type snafu that will very likely drive customers away forever, not just one day.
The Apple Inc. (NASDAQ: AAPL) App Store, Google Inc.’s (NASDAQ: GOOG) Google Play store and Amazon.com Inc.’s (NASDAQ: AMZN) Appstore expect a lot of traffic, and apps makers like Walt Disney Co. (NYSE: DIS) are gearing up for a big day. Disney is releasing an iPad version of its kids’ “Club Penguin” game on Christmas Day. An Apple spokesperson told Bloomberg News that the App Store downloaded 2 billion apps last December.
And how bad is it for the brick-and-mortar retailers? Mall checks by various analysts turned up some depressing news. ShopperTrak estimated that last weekend’s traffic was down 21% year-over-year and that sales were down 3.1%.
Even steep discounts do not attract more buyers, who may be waiting for after-Christmas sales. A visit to a Gap Inc. (NYSE: GPS) Old Navy store in New York on Sunday revealed that everything in the store was on sale for 75% off. An Abercrombie & Fitch Inc. (NYSE: ANF) store marked everything 30% off, including items that had already been discounted. There is not much room for more markdowns, so it is a little difficult to see what shoppers are waiting for. Unless of course, they are finished spending.
Not all traditional retailers are getting beaten up. Macy’s Inc. (NYSE: M) has been singled out as one retailer where sales appear to be doing well. Michael Kors Holdings Ltd. (NYSE: KORS) is another. The thing to watch for is margin, a strong point for Kors and somewhat problematic for Macy’s.
After-Christmas sales are expected to help retailers somewhat, but shoppers typically expect even bigger discounts, so the effect may be dampened this year by the already steep discounts retailers have taken. When stores report same-store sales next month, we will know for sure who won and who lost. But right now, it does not look very good, unless your merchandise included electronics gear and apps.
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