Photo: RetailWire
Projections for the holiday season have been positive with expectations that retailers will exceed last year’s performance. While not all will advance, don’t be surprised, says former Saks CEO Steve Sadove, to find department stores among the holiday’s winners.
In an interview on CNBC’s “Power Lunch,” Mr. Sadove said, “I think the consumer is healthy. If you look at forecasts for the season, the National Retail Federation is up 3.6 percent and most of the forecasts are in the three to four percent range.”
Speaking of department stores, Mr. Sadove said he expects “a comeback” among some chains because “the fourth quarter is going to be much stronger than people anticipate.”
One of the reasons for Mr. Sadove’s optimism is the weather. He pointed to warm temps in November and December as a significant negative factor in 2015. This year, he said, the weather should be cold. “That's going to be good for anything that is apparel- and cold-weather based. So the department stores should fare well in that environment."
Department stores may get a boost from the weather, said Mr. Sadove, but ultimately retailers need to make “fundamental” changes. “They need to have much more exclusive product. They need to have better experiences. They’ve got to change their game.”
Mr. Sadove said that ,while many are closing stores, brick and mortar continues to play a significant role with 90 percent of sales being transacted in physical locations. “Look at Amazon now opening stores,” he said. “Warby Parker is talking about potentially opening hundreds of stores.”
The International Council of Shopping Centers (ICSC), which forecast a sales increase of 3.3 percent, expects brick and click retailers to achieve the greatest growth during the holidays.
“Throughout 2016, consumers have demonstrated a tendency to shop across both digital and physical retail,” said Tom McGee, president and CEO of ICSC. “Even shoppers who purchase online favor retailers with a physical presence and an increasing number of consumers are buying online and collecting in stores.”