Retailers experienced some moderation in traffic and sales in November according to the latest findings of the NRF-BTM Executive Opinion Survey, a monthly index by the National Retail Federation (NRF) and the Bank of Tokyo-Mitsubishi Ltd. (BTM). The Retail Sector Performance Index (RSPI) grew at a slower pace in November (52.1%) than the previous month (56.9%). However the reading was still 8.8 percentage points above its year-to-year value. (The RSPI measures retail executives' evaluations of monthly sales, customer traffic, the average transaction per customer, employment, inventories and a six-month-ahead sales outlook expectation. The RSPI is based on a scale of 0% – 100% with 50% equaling normal.)
“Clearly the retail industry has seen significant improvement over the year,” said Michael Niemira, Senior Retail Analyst, Bank of Tokyo-Mitsubishi, Ltd. “Though the level of growth has come at a somewhat slower pace, expectations for the holiday season remain strong.”
The Operations Index (average of employment and inventories) stood at a normal level of 50.0 percent in November compared to 52.3 percent in the previous month. The index was 2.6 percentage points above the same period in 2002.
The November Current Demand Index (average of sales and traffic) rose at a slower rate than the prior month (53.1% versus 57.3%) and was 9.0 percentage points higher year-over-year. While customer traffic remained steady, sales and the average transaction grew at a reduced rate.
Looking ahead over the next six months, retailers were less optimistic in November than in any month since May. The November Demand Outlook Index (a six-month outlook for sales) stood at 53.1 percent from last months reading of 64.1 percent. However, the November reading was a solid 12.8 percentage points above the same period last year.
The promotional environment in the retail industry remains strong as the November Pricing Index (measure of industry's discounting or pricing power) remained unchanged (28.1%) compared to the previous month and .08 percentage points lower than November 2002.
“Retailers are ready to begin the holiday season with a bang, offering consumers a new and exciting selection of merchandise” said NRF President and CEO Tracy Mullin. “Recognizing consumers continued interest in value, retailers are pricing their goods to sell.”
As in September, retailers were once again asked to provide their expectations for the upcoming 2003 holiday shopping season. Overall, retail executives were more optimistic about the Holiday seasons performance than they were in September. The percentage of retail executives reporting higher sales expectations rose to 62.5 percent in November from 41.7 percent in September.
The NRF-BTM Executive Opinion Survey is a valuable new strategic tool to track essential metrics that gauge the state of the U.S. retail industry. The survey is used to gather the opinions of the industry's top executives on trends in merchandising, hiring, sales expectations, customer traffic and special seasonal-related developments. The survey is conducted on a monthly basis, and as results accumulate, will be used to develop an aggregated index of these industry trends.
The Bank of Tokyo-Mitsubishi, Ltd. (BTM) is a principal subsidiary of the Mitsubishi Tokyo Financial Group, which ranks among the world's top banking and financial groups with total assets in excess of $700 billion. BTM's network in Japan comprises more than 300 offices and BTM's overseas operations consist of more than 400 facilities located in all of the major financial and commercial centers of the world. BTM provides a full spectrum of commercial, investment, and trust banking products and services to individual, corporate, and government clients on a global basis.
The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet and independent stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.4 million U.S. retail establishments, more than 20 million employees – about one in five American workers – and 2002 sales of $3.6 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com.
NRF/BTM Retail Executive Opinion Survey Schedule at a Glance.
The survey will be released the last Wednesday of each month unless there is a federal holiday. If there is a federal holiday, the report will be released the following business day.
December Tuesday, December 30, 2003
January Wednesday, January 28, 2004
February Wednesday, February 26, 2004
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