Despite many headline numbers suggesting retailers have had better-than-expected holiday sales, a parade of brick-and-mortar retailers, including Macy's, have painted a sharply different picture in contrast and showed the gaping divide in performance between physical store and online sales.
In addition to Macy's, Sears Holdings Corp., Kohl's Corp., Victoria's Secret parent L Brands Inc., and bookstore operator Barnes & Noble Inc., among others, have given disappointing profit outlooks since Wednesday after declining holiday season or December comparable sales. Sears and Macy's detailed additional or previously announced store closing plans. The struggling Sears chain, parent of Kmart, also said it's selling its Craftsman tools business as part of its steps to shore up liquidity.
Despite efforts to increase their online sales and beef up their omnichannel strategy to meet the needs of smartphone-toting and social-media addicted consumers, these retailers are burdened by their physical stores, which still represent a majority of their sales.
To be sure, some brick-and-mortar retailers have outperformed. And Amazon has generated headlines with its experiments with physical stores.
But the overall picture is not pretty for the brick-and-mortar sector.
Data from brick-and-mortar retail analytics firm RetailNext shows year-over-year traffic to US stores has declined for at least 48 straight months while monthly sales have dropped for at least 36 straight months. (RetailNext doesn't track numbers from chains including auto, gas and warehouse clubs like Costco, one of the sector's few bright spots. Costco on Thursday said its December same-store sales in the US rose 3%.)
Meanwhile, the divide between physical and online sales performance only seems to widen further amid changing consumer behavior. Adobe said Thursday US online sales in November and December jumped 11% to a record $91.7 billion. comScore data showed desktop online sales in the last two months of 2016 rose 12%. Both firms' data showed mobile sales continued to gain ground.
"We continue to experience declining traffic in our stores where the majority of our business is still transacted," Macy's CEO Terry Lundgren said on Wednesday, adding he expects comparable sales trend this year to remain consistent with the disappointing holiday sales trend "given the overall trends challenging us and the broader retail industry, and the time needed to execute new strategies."
The question is, how much time can these retailers afford to win the ever fickle consumers.