May: The Spread Is the Story
Client Community
Last month we told you May was recovering, and it did. But the recovery arrived unevenly. The median slipped slightly from April's +5.3%, while the gap between the strongest and weakest verticals blew out to 54 points: +49% to −5%. Where you sit in that spread matters more than the median.
A Month of Big Swings
Vertical medians moved 5 to 15 points in a single month. Those are the widest swings we've seen since we came out of the pandemic.
- ✓Kids / Maternity: +0.3% → +15.6%. The cold-spring and delivery story resolved exactly as expected. Plush, baby gifting, and essentials carried it.
- ✓Western Wear: −4.1% → +4.4%. Back above water and above the community median.
- ✓Toys / Hobby: +30.8% → +49.3%. The viral plush wave and trading-card strength haven't slowed.
- ✗Footwear: +5.9% → −1.6%. Sandal softness and aged lifestyle-shoe inventory caught up with the category.
- ✗College: +3.8% → −4.4%. Graduation demand landed in April; licensed-vendor turbulence is doing the rest.
When the swings are this large, the community median tells you less than usual. The question is where your classifications sit inside your vertical's move.
Tidbits Worth Borrowing
A few patterns from inside the verticals that translate well beyond them:
- ✓Contemporary: denim is the universal winner, dresses the universal slow. Boutiques found roughly half their denim value tied up in shallow size depth, prompting consolidation into core fits. Depth over breadth is paying.
- ✓Contemporary: accessories and jewelry are punching above their weight. Strong sell-through is making them outsized margin drivers. Recurring vendor names: Z Supply, Free People, Moon River, Brighton, Susan Shaw.
- ✓Luxury: private label timed for May/June is where the margin lives. Blazers are a sleeper category beating plan, and women's denim is trending over plan on leaner inventory.
- ✓Luxury: trunk shows and made-to-measure stayed strong through the first half. These events are strong connectors to your clients, and demand for these experiences remains powerful.
- ✓Luxury: clearance is being staged to fund August market. Summer markdowns aren't margin loss, they're the cash that pays for Q4 newness.
What Clients Are Doing to Generate Traffic
Nobody is waiting for customers to show up on their own. The most energetic thing in this month's conversations was how many stores are manufacturing their own traffic:
- ✓In-store events tied to product. Toy stores running play events and summer tie-ins that lift add-on sales. Boutiques running men's denim try-on events for Father's Day that convert browsers into buyers.
- ✓Themed sales with a story. Quilt and yarn shops running events like a "Longest Day Sale" around the solstice. The theme gives customers a reason to come in that a percent-off sign doesn't. One caution from the data: these drive strong revenue but compress margin, so pair them with higher-margin kits and add-ons.
- ✓Live selling and text lists. Boutiques running live sales on TikTok and Instagram and building SMS lists they own. The stores doing it well treat it as a discipline with a budget, not a nightly fire sale.
- ✓Loyalty offers that buy patience. Specialty stores facing vendor delays are using points and incentives to keep customers from drifting to whoever happens to have the item in stock today.
The Dominant Theme: Cash Flow
If one theme owned the Beginning of Month conversations this cycle, it was active cash-flow management. Owners are trimming buys, consolidating credit, paying down platform loans, refinancing high-interest cards through lines of credit, and modeling break-even against rent and owner-pay changes. Stores using bridge funding to cover near-term payroll and rent showed up at multiple retailers. This isn't panic. It's owners taking the wheel.
The discipline gaining the most traction: modeling cash flow alongside open-to-buy, and walking through the scenario impact before approving any inflow of inventory. Plan the cash, then plan the inventory. The order matters.
One More Thing We're Watching
Independent retailers are going AI-native on the marketing side, and it's no longer a one-off. We're seeing it across different verticals: owners generating their holiday promo concepts with AI, and one service retailer running AI-written front-desk scripts that recommend mid-tier services first, lifting the average sale. We think that's a good thing. AI is fast and cheap at marketing ideas, and the owners getting the most out of it are the ones backing those ideas with planning discipline: clean data, an honest open-to-buy, and a forecast they trust. That combination is exactly what M1 is here to build with you.
The Takeaway
May confirmed the recovery and widened the gap. The retailers above the line share the same traits they did in April: clean inventory, a markdown cadence with a rule behind it, and buying decisions made from data instead of hope. The retailers below the line are mostly fighting category-specific battles, aged inventory, vendor turbulence, stretched lead times, and those battles are winnable with a plan.
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Onwards and Upwards,
Marc Weiss
Co-founder and CEO
Management One
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