Consumer

Shelly Banjo is a Bloomberg Gadfly columnist covering industrial companies and conglomerates. She previously was a reporter at Quartz and the Wall Street Journal.

With the help of its Prime membership program, Amazon.com Inc. has trained shoppers to open its app at the very moment they realize they need toilet paper or Tide.

Now that same frantic, need-now-buy-now shopping behavior is affecting customers of brick-and-mortar stores, as well. 

Shares of Urban Outfitters Inc. fell 10 percent on Wednesday after CEO Richard Hayne told analysts he had never seen shopping patterns as choppy as they were during the quarter that ended in January, contributing to flat comparable sales and lower-than-expected earnings results.

Retail Misery
Retail stocks have missed out on the past year's stock market rally
Source: Bloomberg

Sales at Urban Outfitters were up in November, with double-digit comparable sales gains on Black Friday and Cyber Monday, leading Hayne to think "things were looking very good." Then came December, and demand plummeted. Shoppers came back to buy last-minute Christmas gifts, but ghosted again shortly after the New Year began. 

And just to preempt complaints about the weather -- retailers' favorite excuse -- here's a chart showing U.S. average temperatures over the past year have pretty much stuck to long-term patterns (though they have mostly been a little higher than average, as you might expect):

Can't Blame The Weather
Retailers love to cite the weather for causing sales declines, but that won't cut it this year.
Source: Bloomberg and CustomWeather

Urban Outfitters isn't alone. In the past year, shopper traffic has mainly spiked in weeks right before holidays, when customers rushed to stores for last-minute gifts, according to data from Prodco. 

Traffic Light
With some exceptions, shopper traffic has been consistently lower than it was a year ago, suggesting customers really need compelling reasons to go to stores
Source: Prodco and Bloomberg

Discounts also tend to be higher around such times, which helps drive traffic:

Discount Days
Average discounts at retailers rose around Black Friday and right before Christmas
Source: MarketTrack Promotional data

But it's clear that the mom who buys Christmas presents throughout the year or winter coats for her kids in July is long gone. Internet-inspired behavioral changes have pretty much erased the concept of shopping seasons, such as "back to school" season or the holiday shopping period. As more shoppers go online, these changes will likely accelerate. 

Urban Outfitters said Tuesday it expects the percentage of sales online to match those in stores in the next three years, a sign the retailer is smartly adjusting to its customers' habits. It also acknowledged online sales aren't all additive: "Digital shopping is partially replacing store shopping," driving discounts, depressing sales and eroding margins, Hayne said. 

Likening the state of the retail industry to the 2008 housing bubble, Hayne said retailers have built too many stores for too long, and "that bubble has now burst." It's an apt analogy. It suggests even more bankruptcies and store closings will come as the winnowing of the retail industry continues. 

But it's important to realize retailers operating physical stores aren't just suffering because online shopping has changed where customers shop. As Urban Outfitters' example shows, it's also because digital shopping has fundamentally altered how people shop. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Shelly Banjo in New York at sbanjo@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net