The holiday season has been over for a few weeks now. 

And maybe you’re one of the many people who still have their holiday decorations up, not quite ready for the holiday season to be over. 

Or maybe you’re not ready to see your credit card statements…

This is my least favorite part of the holiday aftermath. And this year I felt especially guilty for how much I put on my credit card. But I wanted to get my family some really special gifts… I wanted to make it a year they wouldn’t forget.

I wasn’t the only one who had this mentality…

According to the National Retail Federation (NRF), holiday spending in the U.S. rose 4% this year compared to last year. Americans spent $658.3 billion. 

That number includes $122.9 billion in online sales — a 12.6% jump from last year’s online sales.

The Decline of Retail Stores

A lot of retail stores — specifically department stores — are feeling the pressure from rising online sales this holiday season.

These types of stores rely on in-store sales for most of their revenue. On top of that, the holiday season is their prime moneymaking season.

The NRF reports that the holiday season (November and December) accounts for 30% of annual sales for retailers.

So seeing a decrease of in-store traffic and sales will only be detrimental to the future of these stores. 

It becomes nearly impossible to maintain a store when there’s hardly any customers… the store starts to burn cash.

And this is why some of the biggest department/retail stores have been making one of the hardest decisions they’ll ever have to make: deciding to close down a huge portion of their stores.

Sears Holdings Corporation (NASDAQ: SHLD) decided to close 150 of its stores.

And J.C. Penney Company (NYSE: JCP) decided to close 1,000 of its stores.

It may seem that the problem lies in department stores and the growing decay of shopping malls, but even the very popular Target (NYSE: TGT) had a difficult time this holiday season — its sales in November and December fell 1.3%.

Joe Feldman, managing director of Telsey Advisory Group, had this to say:

Of the [40-plus] retailers that have announced holiday sales so far, two-thirds have missed their expectations…

The Real Winner is… E-Commerce

The problem for these retail stores lies a little deeper than just with the imminent death of shopping malls — instead, it’s with the emergence of e-commerce and how easy and accessible it is to shop online.

Why dodge crowds and then wait in slow checkout lines when you could sit in the comfort of your own home and buy the same things without any stress?

And if you’re a procrastinator, you can put off your holiday shopping until the very last minute. This year I noticed a lot more online retailers advertising the last possible day to place your order so it’ll arrive on time. Talk about convenience!

The real winner of 2016’s holiday season was… you guessed it… Amazon (NASDAQ: AMZN).

It was able to grab all of those last-minute shoppers.

According to data from Slice Intelligence, on the Monday before the Christmas holiday, 49.2% of all online sales in the U.S. were made on Amazon.

Amazon consisted of 38% of the online market share for the holiday season. It’s able to dominate such a huge percentage of the market share because it continues to invest and build up its fulfillment centers, making it possible to get its products to customers within a two-day shipping period. 

And I think that’s its biggest appeal… that, and that you can order almost anything from Amazon.

So maybe these in-store retail companies, like J.C. Penney’s and Sears, have the right idea in closing down some of their stores — as long as they start focusing on developing and investing in strong online platforms to sell their products.

With fewer than 11 months until the next holiday season, retail stores have a lot to keep in mind in terms of trying to regain market share… and start making money again. 

Until next time,

Jennifer Clark
Pro Trader Today