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Holiday cheer for retailers may be muted following government shutdown, debt-ceiling crisis

BY Michael Johnsen

One of the casualties associated with the recent government shutdown and game of chicken that legislators played with the nation’s debt ceiling is consumer confidence. And this will have significant ramifications coming into the fourth quarter holiday season, especially as the debate over government spending and the debt ceiling crisis has not been resolved but only delayed until January. 

Holding the holiday season hostage means Washington has lost big points with big retail, and IRI measured the impact. Reminiscent of recession shopping behaviors, almost 2-in-3 consumers are cutting back on non-essential spending; half are again gravitating toward private label or other value propositions and 2-in-5 are beginning to scour online resources in search of coupons and deals. 

And that means the coming holiday season will become promotion heavy, more so than maybe retailers had been planning. 

There are some categories that may benefit from a return to frugal shopping behaviors. For example, it may be a boost for quick-meal solutions and beauty care as consumers pull back from going out to eat and getting pedicures/manicures and instead look for cheaper, at-home indulgences. 

But frugal consumers means a bust for retailers who are on the brink of rolling out holiday displays that have been in the works for months — much of that already-committed inventory is en route to distribution centers, if not already there, waiting for a post-Halloween roll-out.

Import volume at the nation’s major retail container ports was expected to grow 9.1% in October over the same month last year, according to the monthly Global Port Tracker report released Oct. 7 by the National Retail Federation and Hackett Associates. The numbers reflect merchandise ordered months before the shutdown as retailers planned for the holiday season.

Before the recent government showdown ran its course, the NRF was predicting that this year’s holiday sales would grow 3.9% over last year to a total of $602.1 billion. According to the NRF’s holiday consumer spending survey conducted by Prosper Insights & Analytics, the average holiday shopper will spend $737.95 on gifts, décor, greeting cards and more, 2% less than the $752.24 they actually spent last year.

If consumers remain concerned over their fiscal futures as the debt ceiling debate carries into next year, all of that extra inventory could be headed to the discount bins. 

And the retailer’s worse fears may already be manifesting.  

NRF asked holiday shoppers if the political gridlock in Washington around U.S. fiscal concerns would affect their holiday spending plans. On average, 29% of respondents said the situation would somewhat or very likely affect their spending plans. Nearly one-third (32.7%) of those between the ages of 55 years and 64 years said political gridlock in Washington was somewhat or very likely to affect their spending, the highest percent among all age groups surveyed. 

When asked specifically about the overall state of the economy and how it would affect their spending plans, more than half (51%) of consumers said the economy would in some way impact how they spend this holiday season. Specifically, 79.5% plan to spend less overall, looking to cut corners and tighten budgets where they can. 

ShopperTrak on Friday reported that total retail store shopper traffic during the week of Sept. 29-Oct. 5 decreased 7.5% compared to the same time period last year. During the week of Oct. 6-12, foot traffic decreased 7.1% compared with 2012. The Washington, D.C. area saw an even greater decrease, with an 11.4% decline in year-over-year shopper traffic the week of Oct. 6-Oct.12.

Even prior to the government shutdown that began on Oct. 1, waning consumer sentiment had triggered a decline in retail store shopper traffic. During the week of Sept. 15-Sept.21, shopper traffic decreased 4.7% compared with the previous year. The week of Sept. 22-Sept.28 saw a 5% traffic decrease compared with 2012.

But there is a glimmer of holiday hope, still. 

“The furlough of hundreds of thousands of federal workers caused an inevitable decline in consumer visits to retail stores in the first half of October,” stated ShopperTrak founder Bill Martin. “Wednesday’s agreement, which also authorizes retroactive pay for furloughed federal employees, holds promise for a resurgence in shopper activity. However, we expect that it will take some time and revised strategies for retailers to recover from the impact the government shutdown had on sales and store traffic.”

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CDC: Prevalence of U.S. adult obesity at one-third, but remains unchanged since 2009

BY Alaric DeArment

NEW YORK — The overall prevalence of obesity among adults remained unchanged between 2009 and 2012, according to new data from the Centers for Disease Control and Prevention.

Researchers at the agency looked at obesity prevalence in the two-year intervals of 2009-2010 and 2011-2012, finding that the prevalence among men was 33.5% in 2011-2012, compared with 35.5% in 2009-2010. Among women, the prevalence in 2011-2012 was 36.1%, compared with 35.8% in 2009-2010. More than 78 million adults were obese in 2011-2012, as in 2009-2010, the majority of obese adults being non-Hispanic whites. The study was part of the 2011-2012 National Health and Nutrition Examination Survey, conducted by the CDC’s National Center for Health Statistics.

The overall prevalence of obesity did not differ between men and women, but among African-Americans, 56.6% of women were obese, compared with 37.1% of men. Obesity was also higher among African-Americans, Hispanics and whites than among Asian-Americans.

 

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OTC Nasacort will contribute significant incremental dollars to allergy category

BY Michael Johnsen

Chattem recently announced that the Food and Drug Administration approved Nasacort Allergy 24HR nasal spray (triamcinolone intranasal) as an over-the-counter treatment for seasonal and year-round nasal allergies. And that means by spring 2014, there will be another allergy powerhouse alongside Allegra, Claritin and Zyrtec. 

The switch of a significant name-brand, prescription-only remedy to OTC aisles has traditionally meant a significant uptick in sales across the category as one-time Nasacort prescription patients now look for their remedies on the front-end. It’s the next big remedy in this space since Allegra, which was considered a very successful switch when it was launched by the same supplier some two years ago.  

And Nasacort, more than any of the other blockbuster allergy switches, may bring significant incremental sales to the category because it is the first and only nasal corticosteroid to be available without a prescription. That puts it into a class by itself. 

This makes Chattem the new allergy powerhouse. The company already fields Allegra, and for the 52 weeks ended July 14, Allegra products generated more than $335 million in revenue across total U.S. multioutlets, according to IRI. Together with Allegra, Chattem’s OTC allergy portfolio would approach $450 million in annual sales if sales of Nasacort reached even $100 million in sales — a conservative sales estimate for a new OTC category. 

Nasacort Allergy will be approved for the same uses as the prescription version, and for the same ages (adults and children over the age of 2 years), but the labeling for the OTC version will include more information about use in children. There will be a warning that the growth rate of some children might be slightly slower while using the spray, and that if a child needs to use the spray for more than two months per year, it should be discussed with their doctor. 

That may cause moms pause when considering whether or not to treat their children with Nasacort, so pediatric formulations may not move off the shelf as well as Nasacort products marketed toward adults. 

But up to 60 million Americans suffer from seasonal and year-round nasal allergies annually. Nasacort and nasal sprays in the same medication class — which are now eligible to join Nasacort in its transition from Rx-to-OTC — are considered the most effective treatment for hay fever and other upper respiratory allergies. 

And while Nasacort is expected to debut in the spring, the fall allergy season of 2014 is really when sales of the nasal corticosteroid ought to blossom. The launch will have been promoted and effectively merchandised throughout the spring and summer, so fall-time allergy sufferers should be well aware of the new OTC allergy alternative. 

Take that and the several factors that have been contributing to a rise in fall allergy sufferers, and Nasacort sales may begin to exceed first-year expectations. 

Fall allergies are certainly on the rise. Recent studies suggest that rising temperatures and carbon dioxide levels could be extending ragweed season by as much as a month or more. This is especially true in the northern states in the United States where there are now longer periods of warm weather than before.

And pollen from weeds is a greater problem in the fall than in the spring, and fall weeds are more prevalent than spring gardens in major urban areas and locations with significant construction.

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