Specialty retailers, while giving off-price retailers a run for their money, leaned on promotions to sway shoppers, according to Wedbush analysts.
Several specialty stores held their own over the Fourth of July holiday week, thanks to aggressive price promotions, according to Wedbush, which used Google Trends search analytics for a Tuesday report that was emailed to Retail Dive.
The winners, based on the strongest year-over-year gains in search interest last week, were Bath & Body Works, Lululemon, HomeGoods, Aerie, Gap, Athleta and Marshalls, according to the report. Express, J.C. Penney, Banana Republic and Southern department store Dillard’s suffered the biggest declines. At the holiday weekend, Urban Outfitters’ namesake brand (up 4.3%) and its Anthropologie brands (up 11.5%) rose week over week, though Anthropologie was down 1.7% year over year, and Urban Outfitters was flat.
Victoria’s Secret, which has lost share to American Eagle’s Aerie in recent years and is stuck trying to execute a turnaround at L Brands after Sycamore’s bid to acquire it fell through, saw search rise 19.4% year over year last week, inching up 2.4% over the week. BMO Capital Markets Managing Director Simeon Siegel has pushed for the lingerie brand to shrink in order to survive.
Retailers seeing gains last week may have also watched profits get pummeled as they trumpeted hefty midsummer discounts.
“The strong positive trend at the Gap brand and Old Navy is encouraging; however, our Promo Tracker indicates the strength may be promotionally-driven,” said Wedbush analysts led by Jen Redding. “Search interest at the Banana Republic remained at a lower level, although we see the negative trend covered slightly and slowly during the past weeks.”
Despite its own year-over-year decline last week, American Eagle Outfitters enjoyed an overall 13.6% rise in search in the second quarter, which Wedbush deemed “favorable during the post-COVID era.”
Off-price continues to show strength despite little to no e-commerce and the digital channel’s importance during the pandemic. Search interest in those retailers rose 16% on average during the holiday period, following their 60% increase in May and June, according to the report. From the Fourth of July week last year, HomeGoods search rose 48%, followed by Marshalls (up 32.7%) and TJ Maxx (up 17%).
In a continued downcast trend, department stores as a group lost ground, as search interest declined 8% on average last week, with Nordstrom down 5.9%, Macy’s down 7.9%, Dillard’s down 14.3% and Penney down 18.2%, according to the report. Kohl’s, however, stood out, trending up 3.8% year over year.
Stimulus checks provided by the federal government to offset wage losses as the pandemic surged have been credited by some analysts for helping boost May retail sales as stores reopened. But their effect appeared to lose some steam last week. Week over week, on average, off-price declined 11% and department stores declined 5%, “suggesting the boost from the April stimulus checks diminished over time, while the reopening progress stalls in several states as COVID-19 cases peaked in the past weeks,” Wedbush said.
Off-price for several years now has infamously stolen market share from department stores, and both segments have moved swiftly to reopen their locations after being forced to shutter them in order to stave off the pandemic. But shoppers aren’t exactly returning in droves, plus off-price suffered an unusual challenge from specialty retailers over the holiday, Wedbush analysts noted.
“The declines coincide with the recent peaking of new COVID-19 cases, as consumers fear … walking into enclosed stores,” they said. “In the meantime, the extremely promotional retail environment lowered the price level of specialty retailer close to off-price stores, diverting shoppers away.”
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