The 2020 holiday shopping season is shaping up to be a tale of two kinds of retailers. While Target crushed eCommerce and even reported decent in-store sales volume, others like Nordstrom and Urban Outfitters had weak in-store traffic that even fairly good online volume couldn’t overcome.
For instance, Urban Outfitters announced that it is parting ways with Trish Donnelly, CEO of its flagship Urban Outfitters Group, after the company reported poor November and December sales. The firm said sales fell a collective 8.4 percent at Urban Outfitters, Anthropologie and the company’s six other chains during the two-month holiday period.
Management said in a statement that companywide comparable sales decreased 9 percent “due to negative retail store net sales, as stronger conversion rates could not offset the reduced store traffic as a result of the coronavirus pandemic and related restrictions.”
By brand, comparable sales fell 12 percent at Anthropologie and 8 percent at Urban Outfitters. The company said “strong double-digit growth” in digital sales partly offset the weaker in-store performance, but failed to completely do so.
Morningstar Equity Analyst David Swartz wrote in a research note that “virus-related store restrictions and some inventory shortages” took a big toll on Urban Outfitters. “The retailer had handily beat our October-ending fiscal 2021 third-quarter estimates and appeared to have some momentum, but the recent spikes in virus cases in Europe and major U.S. cities were too much to overcome,” he wrote.
Nordstrom’s 23 Pct eCommerce Gain Wasn’t Good Enough
Meanwhile, Nordstrom reported that net sales tumbled some 22 percent during the nine-week holiday period ending Jan. 2, even as digital sales rose by double-digit percentages.
The chain said digital revenues grew 23 percent year over year to reach 54 percent of total sales, up from just 34 percent of overall sales for the same period a year earlier.
But that wasn’t enough to offset weak in-store sales. Nordstrom also said in a statement that it expects shipping surcharges and “premium pay related to the holiday season” to contribute to anticipated weaker year-over-year earnings before interest and taxes for its fiscal fourth quarter. The company will report fiscal Q4 numbers on March 2.
Morningstar’s Swartz blamed Nordstrom’s problems on the fact that it “has many stores in urban areas and tourist cities that are suffering from restrictions and low customer traffic. Moreover, the firm closed 16 full-line stores in the past year, a full-line store base reduction of about 14 percent.”
Nordstrom’s Good Online Numbers vs. Target’s Great Ones
On the plus side, Nordstrom said in a statement that during the holiday season, the chain “continued to leverage its digital and physical assets to provide a unique breadth of merchandise selection across brands, price points and styles, and convenient shopping experiences for customers.”
For example, the company said it fulfilled more than 30 percent of its online holiday orders at Nordstrom and Nordstrom Rack brick-and-mortar stores. That included some 11 percent of Nordstrom.com orders and 9 percent of NordstromRack.com orders that customers picked up in-store.
But while those gains seem like a good start, they pale in comparison to numbers that Target reported only hours earlier for its own holiday sales – both online and offline.
Target’s comparable digital sales grew 102 percent in the November/December period, while store-originated comparable sales rose 4.2 percent. Target said it also saw a 4.3 percent increase in traffic and a 12.3 percent gain in average ticket size. All in, overall comparable sales – both online and in-store – grew 17.2 percent for the period.
“The momentum in our business continued in the holiday season, with notable market share gains across our entire product portfolio,” Target Chairman and CEO Brian Cornell said in releasing the numbers. “We’re very pleased with our results, and the strength of our performance is a reflection of the tireless work of our team to support our guests through a safe, convenient and inspirational experience.”
Swartz told PYMNTS in an email interview that Target’s brick-and-mortar results benefited from the chain being classified as an “essential” retailer, which meant it faced fewer in-store restrictions or closures.
By contrast, Nordstrom and Urban Outfitters suffered from not only greater restrictions on their operations, but also from the fact that they often reside in shopping malls that faced closures and restrictions as well, he said.
“I’m not sure that URBN and Nordstrom did anything wrong as compared to Target,” Swartz said. “It’s just that they are different types of stores.”
The chain attributed much of digital gains to the availability of same-day fulfillment through its Order Pick Up, Drive Up and Shipt delivery options, which collectively saw 193 percent growth.
Target said the Drive Up option – which offers curbside pickup arranged via the Target app – saw the biggest gains, soaring more than 500 percent. The company’s sales fulfilled by Shipt likewise expanded by greater than 300 percent.
The company added that between store-originated sales, same-day services and the ship-from-store operations, Target fulfilled approximately 95 percent of its November/December orders via its brick-and-mortar shops.
That appears to have been a key to Target’s holiday success. Earlier this week, Salesforce reported in its 2020 Holiday Shopping Report that retailers that offered in-person pickup options enjoyed the biggest year-over-year digital sales gains over the holidays.
The bottom line: Nordstrom’s and Urban Outfitter’s double-digit percentage gains in online sales might have been nice, but Target’s triple-digit gains in eCommerce and in-store fulfillment probably marked the difference between holiday sales defeat and victory.
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