Hol­i­day shop­ping dis­ap­points re­tail­ers

Shop­ping sea­son marred by Sandy, New­town killings.

Austin American-Statesman - - FRONT PAGE - MICHAEL DWYER / AS­SO­CI­ATED PRESS

Sales of elec­tron­ics, cloth­ing, jew­elry and home goods in the two months be­fore Christ­mas in­creased 0.7 per­cent com­pared with last year, be­low the healthy 3 to 4 per­cent growth that an­a­lysts had ex­pected.

WASHINGTON — U.S. shop­pers spent cau­tiously this hol­i­day sea­son, a dis­ap­point­ment for re­tail­ers who slashed prices to lure peo­ple into stores and now must hope for a postChrist­mas burst of spend­ing.

Sales of elec­tron­ics, cloth­ing, jew­elry and home goods in the two months be­fore Christ­mas in­creased 0.7 per­cent com­pared with last year, ac­cord­ing to the MasterCard Ad­vi­sors Spend­ingPulse report.

That was be­low the healthy 3 to 4 per­cent growth that an­a­lysts had ex­pected — and it was the worst year-overyear per­for­mance since 2008, when spend­ing shrank sharply dur­ing the re­ces­sion. In 2011, re­tail sales climbed 4 to 5 per­cent dur­ing Novem­ber and De­cem­ber, ac­cord­ing to Shop­perTrak.

This year’s shop­ping sea­son was marred by bad weather and ris­ing un­cer­tainty about the econ­omy in the face of pos­si­ble tax hikes and spend­ing cuts early next year. Some an­a­lysts say the mas­sacre of school­child­ren in New­town, Conn., ear­lier this month may also have chipped away at shop­pers’ en­thu­si­asm.

Re­tail­ers still have time to make up lost ground. The fi­nal week of De­cem­ber ac­counts for about 15 per­cent of the month’s sales, said Michael

McNa­mara, vice pres­i­dent for re­search and anal­y­sis at MasterCard Ad­vi­sors Spend­ingPulse.

Still, this sea­son’s weak sales could have reper­cus­sions for 2013, McNa­mara said. Re­tail­ers will make fewer or­ders to re­stock their shelves, and dis­counts will hurt their prof­itabil­ity. Whole­salers will buy fewer goods and or­ders to fac­to­ries will likely drop in the coming months.

Steep dis­counts weren’t enough to get peo­ple into stores, said Mar­shal Co­hen, chief an­a­lyst at the mar­ket re­search firm NPD Inc.

“A lot of the Christ­mas spirit was left be­hind way back in Black Fri­day week­end,” Co­hen said, re­fer­ring to the tra­di­tional re­tail rush the day af­ter Thanks­giv­ing. “We had one rea­son af­ter an­other for con­sumers to say, ‘I’m go­ing to stick to my list and not go be­yond it.’”

Hol­i­day sales are a cru­cial in­di­ca­tor of the econ­omy’s strength. Novem­ber and De­cem­ber ac­count for up to 40 per­cent of an­nual sales for many re­tail­ers. If those sales don’t ma­te­ri­al­ize, stores are forced to of­fer steeper dis­counts. That’s a boon for shop­pers, but it cuts into stores’ prof­its.

Spend­ing by con­sumers ac­counts for 70 per­cent of over­all eco­nomic ac­tiv­ity, so the eight-week pe­riod en­com­passed by the Spend­ingPulse data is seen as a crit­i­cal time not just for re­tail­ers but for man­u­fac­tur­ers, whole­salers and com­pa­nies at ev­ery other point along the sup­ply chain.

The Spend­ingPulse data re­leased Tues­day, which cap­tures sales from Oct. 28 through Dec. 24 across all pay­ment meth­ods, is the first ma­jor snap­shot of hol­i­day re­tail sales. A clearer pic­ture will emerge next week as re­tail­ers like Macy’s and Tar­get report rev­enue from stores open for at least a year. That sales mea­sure is widely watched in the re­tail in­dus­try be­cause it ex­cludes rev­enue from stores that re­cently opened or closed, which can be volatile.

In the run-up to Christ­mas, an­a­lysts blamed bad weather for putting a damper on shop­ping. In late Oc­to­ber, Su­per­storm Sandy bat­tered the North­east and mid-At­lantic states, which ac­count for 24 per­cent of U.S. re­tail sales.

Shop­ping picked up in the sec­ond half of Novem­ber, but then the threat of the coun­try fall­ing off a “fis­cal cliff” gained strength, throw­ing con­sumers off track once again.

On­line sales, typ­i­cally a bright spot, grew only 8.4 per­cent from Oct. 28 through Satur­day, ac­cord­ing to Spend­ingPulse. That’s a dra­matic slow­down from on­line sales growth of 15-17 per­cent seen in the prior 18month pe­riod, ac­cord­ing to the data ser­vice.

A FedEx courier makes last-minute de­liv­er­ies Mon­day. Although fresh hol­i­day shop­ping data is ex­pected in coming days, early fig­ures point to a ho-hum sea­son for re­tail­ers.

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