Cyber Monday retail sales broke all records and overall November retail sales were robust, buoyed by  generous discounts and improved discretionary spending across demographics.

Why are some of the top retailers, like Costco and Target, beating their own November projections? And will this mean across-the-board wins for the fourth quarter? Highly unlikely.  We still see some softness and there will likely still be some losers this holiday season. We predict those apparel companies, and the retailers they serve, that will continue to do well throughout December did a number of things right preparing for Q4.

•  •  They managed sell-through masterfully. Our apparel clients who are performing well didn’t believe the hype back in June. They based their orders on past performance during more uncertain times. They only dealt with retailers that proved they could move product, even during the Recession.
• •  They educated new buyers. The downturn caused many retailers to cut back on or consolidate buying departments; those left were covering larger distribution areas that weren’t as familiar to them. Clients who trusted their own instincts instead of relying on inexperienced buyers to manage their inventory distribution will likely do better than their competitors.
• •  They didn’t discount luxury brands. Once a luxury brand is found in a deep-discount bin in January, it can take years to regain its luster. Those selling high-priced brands are having the most success when they stay firm on price, understanding the brand’s aspirational qualities and conducting its business accordingly. To move additional product, they created  sub-brands at a new lower price point or moved product overseas, if necessary, leaving the aspirational flagship or ‘halo” brand intact. In fact some premium brand price points have been moved up despite the Recession to create room for the sub brand. There is very good money to be made at the value end of the market, but a company’s costs/margins have to stack up and they have to move more product. They also need to understand the distribution chain intimately.
• •  They micro-managed to create January cash flow. The post-Christmas period is the cash flow for the business.   Those apparel companies who will be best prepared for 2011 will not have overextended themselves with chains that went into this season still struggling from last year. They have a good understanding of the post holiday cashflow coming from their customers, having ironed out all supply and logistics problems ahead of the holiday.

It will be interesting to see the consumer spending patterns this holiday – especially the final split between buying presents for others and buying for themselves.  It’s then when we’ll get a good picture of pent up demand for discretionary personal spending after a long period of austerity.

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