As we wrap up 2024, we’re seeing some fascinating shifts in the retail landscape, from surprisingly strong November sales numbers to major changes in how industry leaders manage their inventory.
This month’s newsletter explores how retailers like Nordstrom and Macy’s are modernizing their accounting practices, plus we dive into the latest consumer spending trends and regional performance metrics from the furniture and mattress sectors.
Get ready for a data-packed edition that will help you understand where retail is heading as we move into 2025.
Today’s Rundown
- Consumer Behavior: How Zillennials are redefining consumer behavior.
- State of the Consumer 2024: What’s now and what’s next in retail innovation and consumer behavior.
- OUT NOW: Sign up to receive the Q3 2024 Home Furnishing Benchmark Report.
Last week by the numbers
Last week the furniture industry as a whole averaged 25 opportunities a day, a 9% decrease compared to last week. On the East coast, furniture retailers saw slightly less traffic than the industry average with an average of 22 visits a day. Conversely, the West coast averaged 34 visitors a day, a 10% decrease to the previous week.
The Mattress industry saw similar foot traffic across the board with an average of 4 visitors a day, a 6% decrease week-over-week. The industry as a whole had an average ticket of $1,977 over the last 7 days, a 18% increase compared to the previous week. The east coast had an average ticket of $1,994 over the same period, while the west coast had a lower average ticket of $1,069.
US Retail Sales Beat Expectations in November
November brought unexpected strength to U.S. retail sales, with a robust 0.7% increase that exceeded economists’ forecasts of 0.5%. This growth, led by strong motor vehicle purchases, signals healthy consumer spending as we close out the year. The positive numbers are particularly noteworthy given that Cyber Monday sales fell into December due to this year’s late Thanksgiving.
The strong retail performance is backed by several key economic factors: a resilient labor market with low layoffs and strong wage growth, healthy household balance sheets boosted by record stock market values, and stable home prices. These fundamentals continue to support consumer confidence and spending power across the retail sector.
Looking at the broader economic picture, core retail sales, which exclude automobiles, gasoline, building materials, and food services, rose 0.4% in November, rebounding from October’s slight dip. This core measurement is particularly significant as it serves as a key indicator of consumer spending patterns and overall economic health.
Nordstrom and Macy’s abandoned the ‘retail inventory method’ after using it for decades.
Despite RIM’s deep roots in retail accounting, major players are finally making the shift to modern cost accounting methods. Notable moves come from Macy’s and Nordstrom, who have fully converted their systems this fiscal year, signaling a potential industry-wide evolution in inventory management practices.
The benefits of switching to cost accounting are becoming increasingly clear. While RIM’s price-based calculations can trigger questionable buying decisions after markdowns, cost accounting maintains consistent inventory values based on actual purchase prices. This stability leads to more strategic purchasing decisions and clearer profitability insights at the item level.
Both Macy’s CFO Adrian Mitchell and Nordstrom’s CFO Cathy Smith have expressed enthusiasm about their transitions, highlighting improved buying decisions, better selling strategies, and more accurate inventory tracking. Currently, about one-third of NRF’s top 100 retailers still use RIM, but this number may decrease as more companies recognize the benefits of cost-based accounting in today’s digital retail environment.
Retail Snippets
Consumer Health: 2024 will go down as Walmart’s best year since 1998.
Consumer Behavior: How Zillennials are redefining consumer behavior.
State of the Consumer 2024: What’s now and what’s next in retail innovation and consumer behavior.
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The post December Digest: November’s Surprise + What’s Moving the Market appeared first on Trakwell.ai.
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