For some retailers, the holiday season was not so merry.
Nordstrom Inc. reported a net sales decrease of 3.5 percent for the nine-week holiday period ended Dec. 31, 2022, compared with the nine weeks ended Jan. 1, 2022. For the full-line Nordstrom banner, net sales fell 1.7 percent, while net sales at the off-price Nordstrom Rack banner tumbled 7.6 percent.
“This holiday season was highly promotional, and sales were softer than pre-pandemic levels. While we continue to see greater resilience in our higher income cohorts, it is clear that consumers are being more selective with their spending given the broader macro environment,” Erik Nordstrom, chief executive officer of Nordstrom, said. “Still, our team executed well, and we enter 2023 in a stronger position as we prioritized starting the new fiscal year with clean inventory levels, even if this required more markdowns than planned.”
The department store retailer took additional markdowns to finish the year in a better inventory position. Nordstrom said it expects year-end inventory levels to be down by a double-digit percentage compared with last year, at roughly 2019 levels.
“Having a healthier inventory level and mix positions us well to react quickly to changing consumer demand,” Pete Nordstrom, president and chief brand officer of Nordstrom, said. “Given the continued uncertain environment, we remain focused on executing with flexibility and agility, including conservative buy plans and faster inventory turns. We continue to enhance our customer experience with our ‘Closer to You’ strategy, which links our digital and physical assets. Additionally, we are further optimizing our supply chain to improve the customer experience and expense efficiency, and we expect these initiatives will continue to deliver significant benefits in 2023.”
The holiday turned out a bit differently when looking at online fashion sales, however.
Global digital fashion sales rallied in December as retailers closed out 2022 peak trading and holiday campaigns with strong performances despite economic headwinds and rising price sensitivity among shoppers, according to True Fit, a data-driven platform that decodes fit and size for apparel and footwear retailers.
Data from True Fit’s Fashion Genome, a connected data set for fashion that analyzes insights from 17,000 retail brands and data from 80 million active members, showed that while traffic to online retail sites during the holiday season dipped 9 percent versus 2021 as shoppers returned to stores, online checkouts in December rallied.
Order volumes for online fashion in December globally rose 12 percent compared to 2021, according to True Fit data, helped by holiday discounting and extended sales periods increasing demand among price-sensitive shoppers. And, as order volumes surged, the demand for fit guidance seemed to rise as well, with True Fit registrations up 30 percent year-over-year in December 2022.
Separate data from BDO, Britain’s fifth-largest accounting firm by revenue, showed that, despite pre-Christmas warnings and downbeat forecasts for festive trading amid the rising cost-of-living crisis, retailers saw omnichannel sales across both brick-and-mortar and e-commerce rise by 9.8 percent in December 2022 compared to 2021. It said fashion continued to be one of the highest-performing sectors for discretionary spending, with omnichannel apparel sales up 16 percent last month versus 2021. Meanwhile, insights from Wunderkind, a performance marketing solutions provider formerly known as BounceX, pointed to a post-Christmas online surge, reporting online sales in the last week of December 202 rose 26 percent year-on-year.
“We saw most retailers in the Fashion Genome stabilize in 2022 from the Covid-related swings of 2020-2021,” True Fit CEO William R. Adler said. “In 2023, we expect leaders that prioritize building long term customer relationships will navigate the macro and be well positioned to capture growth as the fashion accelerates toward $11 trillion online by 2025.”
True Fit’s data showed that fashion orders from online multi-brand retailers significantly outpaced orders from direct-to-consumer (DTC) brands, with digital department stores taking 50 percent more orders than their DTC rivals during the holiday trading period. This, True Fit suggested, could also be linked to consumers trying to cut down on discretionary spending, choosing to place multiple orders via one online retailer in a bid to incur only one delivery fee, rather than having to pay separate fulfillment charges for individual orders placed with various retailers, as well as the increased levels of credit offered by multi-brand retailers compared to brands.
“While retailers remained cautious in the run into peak trading, with many downgrading trading forecasts amid cost-of-living concerns, we have seen stand-out performances with some retailers, including Seasalt and Next, posting better than expected results,” Sarah Curran-Usher, managing director of True Fit, said. “But retailers won’t be looking at those results through rose-tinted glasses—they know that economic headwinds are set to continue into 2023, prompting further consumer spending caution and elongated consideration phases in shoppers’ buying journeys. And that will mean they will need to fight harder—and smarter—to win each conversion and sale.”
For U.S. retail stores, though, December wasn’t as positive. Retail sales fell 1.1 percent to $677.1 billion from the month prior but was up 0.6 percent above December 2021, the U.S. Census Bureau reported.
The National Retail Federation (NRF) said that November-December 2022 retail sales rose 5.3 percent to $936.3 billion, though that fell short of its estimated 6 to 8 percent growth over 2021.