Stuck in a Rut Retail sales during Q2 2017 were still relatively tepid, although April started the quarter with an 0.4% increase month-to-month, May decreased 0.1% and June 0.2%, resulting in just a +0.1% increase for the quarter. Larger retail chains tempered April’s performance, although the best of all three months. A 4.7% decline in auto sales and less discretionary spending were the culprits in May’s decrease. Lower gasoline prices and less spending at apparel stores, supermarkets and restaurants and bars had the greatest effect on June’s unexpected negative performance.

Business-Owner Optimism and Consumers’ Open Wallets Despite a disappointing month- over-month retail sales during the first six months of 2017, Gallup’s latest (August 2017) US Small Business Index for Q3 2017 of +106 is the highest during the past decade. According to Gallup, Americans’ average daily spending was $107 during April 2017, which exceeded December 2016, and although May declined slightly to $104 and June to $103, June’s number was the highest since 2008. Households with annual incomes of $90,000 or more were most responsible for the June number, with average daily spending of $163, or a Q2 2017 average of $167, while households with annual incomes of less than $90,000 averaged just $79.

Quarter Started Well During April Brick-and-Mortar Retail Performance, April 2017 vs. March 2017 Metric April March Sales (customer sales net of returns) -8.7% -8.1% Traffic (total number of shoppers) -5.7% -9.2% Conversion (sales transactions as a percentage of traffic) (CVR) -0.9% 0.0% Average Transaction Value (sales divided by transactions) (ATV) +2.3% +2.1% Shopper Yield (sales divided by traffic) (SY) -3.4% +1.1% Transactions (sales transactions and returns transactions) -10.9% -10.1% Percent Returns (returns transactions as a percentage of total transactions) -0.2% +0.2% RetailNext, May 2017

Mostly Red Numbers for May’s Retail Performance During May 2017, the performance of the sales and traffic metrics were all in red numbers in the four US regions, with the Midwest performing the “best” at -2.1% in sales, but the worse in traffic at - 12.5%. Saturday, May 13th was the best day of the month in sales, traffic and transactions, but was the worse day for percent returns. The worst sales day was Monday, May 22nd and the worst traffic and transactions day was Monday, May 1. What RetailNext defines as “traffic- dependent ratios” were all positive during the second week of May: shopper yield, +14.4%; traffic, +5.9%; and conversion, +2.1%. The other three weeks of the month recorded negative numbers in all three metrics.

June Was the Bottom of the Quarterly Barrel With June having the largest decrease in month-over-month retail sales of the three months of Q2 2017, it follows that the month’s performance metrics didn’t compare well to April’s and May’s, except in a few categories. Since Father’s Day was Sunday, June 18th, Friday, June 16th, was the best day in conversions during the month, while Saturday, June 17th was the best day for sales, traffic, shopper yield and transactions. Because June was the coolest June since 2012 and the rainiest June since 2015, regional performances were off, too. Sales and traffic decreased in all four regions, with decreases in conversions in the Northeast and South.

Advertising Strategies With the first half of 2017 as unspectacular as recent years, small-business owners/retailers should focus their optimism on squeezing last remaining sales from the Back-to-School season and make strong pushes for Halloween and Christmas to finish the year bright. To combat the Amazon effect, recommend that your clients assign an employee to research merchandise sold in the store to the same items on Amazon, and then promote the store’s lower prices on those items. Now is the time to review your prospects and clients and find those that could benefit from creative and even unusual co- promotions during the remainder of the year, especially the holiday shopping season.

New Media Strategies Create and post some “Did You Know” content that features products, with accompanying photos and/or videos, in the store that most local consumers probably don’t know you carry. Create more of a personalized connection with your employees and current and potential customers by posting videos they record of an unusual and/or unique hobby or interest, or an interesting part of their backstory. To generate foot traffic, post a photo of the owner dressed in a bunny suit or other silly costume on social media. Announce that he or she will appear in the suit one day during the next week. Shoppers who have their picture taken with him or her receives a discount.