As Stein Mart Inc. CEO Hunt Hawkins addressed the Association for Corporate Growth North Florida on Thursday, he began with a classic clip from an old “I Love Lucy” episode.
The clip shows Lucy and Ethel trying to wrap chocolates at a candy factory, but the conveyor belt is moving too fast for them to keep up.
“I think we’re fighting a losing game,” Lucy says to Ethel.
“That’s kind of how it’s feeling in retail right now,” Hawkins said at the luncheon at Epping Forest Yacht & Country Club. “Things are moving really fast.”
Jacksonville-based Stein Mart has been struggling to rebound sales since Hawkins took over as interim CEO a year ago and permanently in January, but his talk focused mainly on industry trends rather than Stein Mart’s operations.
“It’s particularly challenging in the apparel sector,” he said.
Overall retail spending in the U.S. is higher this year, but much of that is coming in categories that will likely continue to see a spike because of hurricane recovery spending, Hawkins said.
That includes the building supply and furniture categories, but also automobiles and auto parts. Hawkins said a million cars in the Houston area alone were damaged by Hurricane Harvey and will have to be replaced or repaired.
Texas and Florida, which saw a statewide impact from Hurricane Irma, are Stein Mart’s two biggest markets. Hawkins said it’s too early to see if sales are bouncing back in those states as residents recover.
While hurricane-related spending might help the overall numbers, apparel sales have been flat and department store sales dropped 4.2 percent in the first half of this year, he said.
One ongoing trend hurting retailers is a shift in consumer discretionary spending away from goods to “experiences,” such as travel, he said.
Consumer spending used to be more evenly divided between goods and services, but data shows spending on services has risen from 54 percent three decades ago to 68 percent now, Hawkins said.
“That’s one of the things we’re really struggling with,” he said.
Of course, the trend that has grabbed everyone’s attention is consumers making more purchases online.
“Now you have the phenomenon of people not wanting to go to the mall,” Hawkins said.
Survey data shows consumers like an easy shopping experience almost as much as they like to find bargains.
The percentage of consumers who consider “stress-free shopping” a major factor in their shopping preference has grown from 53 percent in 2014 to 61 percent this year, he said.
Meanwhile, the percentage preferring a “good deal” has slipped from 64 percent to 62 percent.
Stein Mart has been trying to increase sales through its website but like all retailers, it faces difficult competition from Amazon.com.
“They have set a bar for those of us in e-commerce that makes it hard to compete,” Hawkins said.
“We’re in it (e-commerce) and it's growing like a weed. But it's got to be profitable for you,” he said.
Hawkins said he’s confident that traditional retail will make a comeback, but it will take some time.
“It’s tough out there in retail,” he said.
“We remain optimistic at Stein Mart.”