With fewer shopping days between Thanksgiving and Christmas this year, retailers are impatient to get a jump on the holiday season. But one survey recently identified two merchants that should think twice about opening their doors to customers on Turkey Day.
The Placed survey uncovered which brick-and-mortar retailers holiday shoppers have low propensities to visit. The study found warehouse stores underindexed in visitation, meaning they don't have much to gain by opening ahead of Black Friday. By comparison, the study found most off-price department stores among the merchants we're willing to visit on Thanksgiving. One exception is Kohl's (NYSE:KSS), which plans to open on that Thursday.
Given the difficulties Kohl's has faced lately, it should reconsider its "open" status on Nov. 28. In recent years, Kohl's has taken the focus off national brands and fixated on its private brands, a decision that has arguably hurt the company. Just last Thursday, the department store chain reported weak results, sporting an unattractive 18% decline in third-quarter earnings and a 1.6% drop in same-store sales. Furthermore, Kohl's management stated that it has scaled back inventories ahead of the holiday shopping season, possibly indicating a lack of confidence in its ability to boost sales. The retailer still plans to increase holiday marketing and discounts to get more consumers in the door.
Unlike Kohl's, Costco (NASDAQ:COST) has made the wise decision to stay closed while we're stuffing our faces with turkey and trimmings. While warehouse stores like Costco are not a likely shopping destination on Thanksgiving, this retailer enjoys a healthy growth outlook, supported by robust industry growth. Warehouse club stores ring up roughly $150 billion in annual revenue, representing a 7% annual growth rate since 2001. Despite membership fee increases, Costco maintains high customer loyalty. Renewal rates are at 86%, and the rate stands at an even greater 94% for small-business customers. Giving shoppers the brands and products they want at great prices has kept Costco customers coming back year after year. Costco sales have grown nearly 9% annually during the last five years.
Both Kohl's and Costco would be better off keeping their doors closed on Thanksgiving. Perhaps Kohl's views opening as its Hail Mary pass.