Orbital Insight’s State of US Retail: Q4 Review

A historically weak quarter across the board

Orbital Insight, a geospatial big data company creating actionable data through proprietary deep learning analysis of satellite and UAV images to understand and characterize socio-economic trends at scale, is excited to announce the first of its quarterly State of US Retail Traffic Review, which encompasses a comprehensive breakdown of macro and sub-sector trends and patterns found in Orbital Insight's retail traffic data. This report was produced based upon data for the fourth quarter of 2015 (October-December).

For any questions, comments or feedback, please reach out to Rob Morse (rob@orbitalinsight.com) or Anthony DeRosa (aj@orbitalinsight.com).

Methodology

Orbital Insight uses deep learning algorithms to identify cars with high accuracy from satellite images at more than 55,000 parking lots of major retail chains across the US. Its proprietary methods turn raw car traffic counts observed at parking lots across the country into continuous time series; these "normalized" time series correlate with same-store-sales trends at the chain level. Orbital Insight's State of US Retail Traffic Review is derived from Orbital Insight's chain-level car counts.

Macro Analysis

Orbital Insight saw broad weakness in retail traffic in 4Q15. Thirty-nine out of the 50 chains we tracked saw decreases in the year-on-year percentage change in traffic versus the year-over-year rate achieved in 3Q15 (July-September). To put this in historical context, only one quarter since 2010 has seen fewer than 11 chains accelerate — 10 chains accelerated in 1Q13.

Furthermore, the average decline seen at Orbital Insight's 50 chains was -3.9% in 4Q15, which is the second lowest value since 2010. The average decline in 1Q14 was -6.6%.

Lastly, the deceleration in the year-over-year growth rate of from -0.5% in 3Q15 to -3.9% in 4Q15 was the second largest deceleration since 2010 (1Q13 decelerated -4.3% from 4Q12).

Overall, 4Q15 represented arguably one of the weakest quarters of retail traffic that we have witnessed since 2010.

Sub-Sector Analysis

While the overarching theme of 4Q15 was feeble traffic counts, Orbital Insight's data shows specific pockets of strength and weakness. In particular, six out of 11 department and apparel stores saw pickups in their year-over-year percent change in car counts, signifying accelerations from a notoriously weak Q3 for the sector.

On the other hand, nine out of 10 home improvement stores decelerated in Q4 compared to Q3, pointing to a sharp slowdown in the sector. Widespread weakness was seen in other parts of retail including at fast casual restaurants, auto-part dealers, grocery stores, superstores and discount retailers.

Retailers tracked by Orbital Insight: AAP, AZO, BBBY, BBY, BGFV, BIG, BKS, BONT, BURL, BWLD, CAB, CMG, CONN, COST, CVS, DDS, DG, DKS, DLTR, DSW, ETH, FIVE, HD, HKFI, JCP, JWN, KIRK, KR, KSS, LL, LOW, M, MFRM, MIK, MNRO, MW, PBY, PETM, PIR, PLCE, PNRA, RAD, ROST, RSH, SBUX, SCVL, SHLD, SHW, SMRT, SPLS, SSI, TGT, TJX, TSCO, TUES, ULTA, WAG, WFM, WMT, WSM

About Orbital Insight

Orbital Insight is a geospatial big data company leveraging the rapidly growing availability of satellite, UAV, and other geospatial data sources that works at the intersection of two trends that are changing how we do business: big data and the commercialization of space. Orbital's sophisticated technology serves as a "macroscope" that zeroes in on the details of satellite images to help make better financial predictions. From cars in parking lots to trees in the rainforest, Orbital can analyze any type of aerial imagery at massive scale to deliver insights that help professionals make smart market decisions. Orbital is focused on transforming images from space into insights we can use right away, here on earth.