Fitch Ratings expects modest improvements in retail sales growth in 2014
New York — Fitch Ratings expects total U.S. retail sales growth in the 4% range in 2014, a modest increase over expected 2013 figures that reflects slight improvement in both the employment rate and real wages.
Fitch expects 2013 holiday sales to grow in the 3%-4% range, in line with The National Retail Federation forecasts that November and December sales will increase 3.9% year over year to $602 billion.
Overall, Fitch is maintaining a stable credit outlook for U.S. retailers in 2014. However, the modest negative tilt to rating activity will continue, given ongoing top-line pressure on some large industry participants.
Fitch expects liquidity to remain strong for most U.S. retailers with solid levels of cash and unused bank lines, most of which do not expire until 2016 or further. Debt maturities for 2014-2015 remain manageable for investment grade retailers. In the high yield segment, most retail issuers took advantage of favorable credit conditions in 2013 to extend maturities well beyond 2015.
There is some potential for LBO or acquisition activity, and debt-financed dividend payments or share buybacks, but Fitch expects the pace to moderate significantly given the strong level of activity in 2013.
Fitch’s 2014 sales growth projections assume 2%-3% in same store sales. Store growth is expected to be modest given the overstored profile of the retail industry. Consumer electronic and office furniture store closings will offset some moderate square footage growth in the discount space and ongoing rapid growth in the dollar store segment.
The ability to maintain market share remains a key challenge for many traditional retailers, in view of the strong growth in online sales on top of the continued encroachment by discount formats. Traditional retailers that are willing and capable of investing in a multichannel strategy will continue to drive market share gains at the expense of retailers that struggle to maintain relevance in a mature but dynamic sector.
The full 2014 Outlook: U.S. Retailing is available at Fitchratings.com.
comScore: Online holiday spending off to solid start
Reston, Va. — For the holiday season-to-date (Nov. 1 – 24), $18.9 billion has been spent online using desktop computers, up 14% versus the corresponding days last year, according to comScore. Tuesday, November 19 was the heaviest online spending day of the season to date at $963 million. Two other shopping days – Thursday, Nov. 14 and Sunday, Nov. 24 – have also seen at least $900 million in online retail spending.
“The 2013 online holiday shopping season is off to a solid start with nearly $19 billion in desktop e-commerce sales, an increase of more than 14% versus last year," said Andrew Lipsman, comScore VP of marketing & insights. "The heaviest online spending day thus far fell just shy of $1 billion in sales, and though we’ve not yet reached that benchmark we can expect to see that spending threshold eclipsed numerous times during the post-Thanksgiving period. Black Friday and Cyber Monday can both be expected to easily surpass that total, with Cyber Monday already beginning to point toward $2 billion."
comScore expects mobile commerce (i.e. buying on smartphones and tablets) to reach $7.1 billion for the November-December holiday season, representing 13% of total digital commerce. Total spending across digital channels is expected to be $55.2 billion for the season.
Survey: Target.com tops in digital coupon distribution
Minneapolis — Target.com’s coupon distribution page — coupons.target.com – achieved the highest total average daily visits through the first half of 2013, according to an analysis by Kantar Media Marx. This is almost double the number of average daily visits to other key retail websites tracked by Kantar Media Marx.
The analysis found that in the first half of 2013, average daily visits changed on a number of key sites. Kroger.com grew its average daily visits at its coupon distribution page by 57% in to 94,200, putting Kroger.com in the same league as Target.com, capturing more average daily visits in six months than seven other retailer coupon distribution page’s average daily visits combined. This places Target.com and Kroger.com as two of the most heavily trafficked coupon distribution pages across the retailer websites analyzed by Marx.
Safeway.com’s coupon distribution page increased average daily visits by 436% in the first half of 2013 compared to the year ago period, reaching 42,100 average daily visits. This moved Safeway.com from the No. 5 to the No. 3 position in, behind Kroger.com. CVS.com dropped down from the No. 3 position to the No. 5 position, with 4,900 fewer average daily visits occurring in H1 2013 compared to the same period in the prior year.
The decrease potentially makes CVS.com less appealing than other key retailer websites analyzed, due to the decrease and lower level of average daily visits. CVS.com has fewer average daily visits than Target.com or Kroger.com, thereby having fewer opportunities in supporting a shopper with coupon offers on their path to purchase at that retailer.
“Not all coupon locations are created equal,” said Darcy Douglas, director, Account Solutions for Kantar Media’s Marx. “Website coupons need exposure to shoppers if they are going to influence the path to purchase.” “Retail websites such as Safeway.com are continuing to enhance programs such as Just for U that may drive additional traffic to their coupon locations. As Safeway continues to innovate by adding new coupon offers daily, shoppers will develop trip planning and shopping behaviors around these initiatives.”