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Retail profit dropped 28 percent thanks to markdowns and promotions, according to the report. Retailers have sold roughly 21 percent fewer items at full price this year compared to 2014, starting with September and leading up to Black Friday. DynamicAction found markdowns and promotions have had a 9 percent negative impact on retail profit, primarily as a result of markdowns, which have reduced margins by 8.2 percent from last year.
While brick-and-mortar retailers suffered a loss in foot traffic and profits, shoppers are buying more online and merchants are doing a better job of matching inventory to demand, and providing fulfillment.
"When you look closely, there are some key shifts occurring with the most innovative retailers' holiday performance that will help them propel their 2016 success," said John Squire, CEO at DynamicAction. "The two key shifts for the holiday retail winners were improving efficiency and experience. This means running leaner, with fewer products on the warehouse shelves. It means they were prepared to utilize their stores as warehouses, shipping from the most profitable location."
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