Grow Market Lead
Consumer
data
By Tom Epstein
No Dips Behind
Retail sales, gift cards finished strong in 2011
R
etail sales are back! And
gift card sales are leading
the way.
As of this writing, I still
do not have all the holiday numbers—
but what I have so far is looking very
good for franchising. For the brands
we work with, the overall sales increase
was around 12 percent year over year.
We saw a good Thanksgiving weekend, with sales up around 9 percent.
Usually we see a dip after Thanksgiving weekend until the week or so before Christmas. This year we did not
see any dip; sales just kept on going.
From the numbers we are seeing, it
was not so much that there were more
sales transactions—it was more that the
sales recorded were for higher dollar
amounts.
Compare this to what Target announced as a 1.6 percent increase in
same-store sales over the holidays (driven
more by grocery items than by electronics). And First Data Corp. (the largest
processor of payments in the U.S.), in
their SpendTrend indicator, reported an
increase of 7.3 percent in same-store
consumer spending. Combining this
information, one could conclude that
consumers preferred shopping at smaller
businesses this year—which would seem
to help franchisees, as most consumers
view individual franchise locations as
smaller, local businesses.
Gift cards rock
This trend was especially highlighted
in the gift card sector. Note the increase in gift card dollar amounts this
year over last in all sectors (see table).
Factor in the accounting principles
of gift card acceptance (that you do not
38
Franchiseupdate Iss u e I, 2 0 1 2
From the numbers
we are seeing,
it was not so
much that there
were more sales
transactions—it
was more that the
sales recorded
were for higher
dollar amounts.
Gift Card Sales
Sector
Fine dining restaurant
Fast casual restaurant
Quick service restaurant
Coffee shop
Specialty retail
Department store
Convenience store
Entertainment
2010
$54
$33
$18
$21
$43
$46
$33
$31
2011
$69
$41
$21
$24
$52
$57
$52
$37
count a gift card sale as a sale on your
books until it is redeemed), and this
should lead to a good spring as consumers who received gift cards over the
holidays begin to spend them.
Mobile on the move
Another trend we are seeing that seems
to be helping traditional brick-andmortar merchants is the increased
use of mobile technology. As a result
of consumers being able to download
apps to their phones that allow them
to price-check items in a store against
both brick-and-mortar competitors and
online merchants, consumers can now
make better decisions about whether
or not it is worth their time and effort
to drive to another store or go online
and deal with the uncertainty of holiday shipping or just buy in the store
they are in at the time. According to
recent studies:
• 29% of smartphone users look up
products while in the aisles;
• 45% of those compare prices with
those at other stores; and
• only 8% end up purchasing those
same items elsewhere.
Smart retailers are embracing mobile commerce to attract customers
into their stores and keep them there.
Card use trends
Another interesting set of numbers I
saw in a recent payment trade publication showed the overall percentage
of card transactions worldwide (see
table below).
These trends are expected to continue, with Latin America and Asia
gaining steam and reaching 10 and 20
percent of total worldwide card purchase volume, respectively, by 2015.
This seems to support the strategy
of many of our clients, who are looking for growth to continue to come
from opening new locations outside
the U.S. n
Tom Epstein is CEO and founder of
Franchise Payments Network, an electronic
payments processing company dedicated exclusively to helping franchisors and their
franchisees improve system performance,
increase revenue, and reduce expenses.
Contact him at 866-420-4613 x1103 or
[email protected].
Card Transactions Worldwide
Region
United States
Europe
Asia/Pacific
Canada
Latin America
Middle East/Africa
% of total
(2009)
48.8%
21.9%
15.5%
5.7%
6.6%
1.4%
% of total
(2011)
47.5%
22.7%
16.0%
5.5%
6.9%
1.5%
Change
(%)
-1.3
+0.8
+0.5
-0.2
+0.3
+0.1