As I predicted, retail sales for the 2012 holiday season came in under the projections. With so many people still out of work and so much uncertainty about where the economy is headed, I think consumers did the prudent thing in pocketing their cash. It didn’t help that all we heard about during November and December was that the debt ceiling is falling in, that we were about to jump off a fiscal cliff, and that heavily armed demented sociopaths lurked around every corner. Add a Hurricane Sandy to this melancholic mix, and it is hardly surprising that holiday sales could be best described as tepid.
Following are 2 articles that give an excellent summary of the seaon. One is from the National Retail Federation (NRF) website that covers retail sales in general. The other is from California Apparel News that is specific to the apparel world.
Holiday Retail Sales Up 3.0 Percent to $579.8 Billion – NRF website
NEW YORK, January 15, 2013 – Solid consumer spending in the month of December helped retailers finish the year with a healthy holiday shopping season, however economic uncertainties sent a cautious consumer to the stores. According to the National Retail Federation, the world’s largest retail trade association, December retail sales (excluding automobiles, gas stations and restaurants) increased 0.8 percent seasonally adjusted from November and increased 2.1 percent unadjusted year-over-year.
Total holiday retail sales increased 3.0 percent, below NRF’s projected forecast of 4.1, to $579.8 billion. Additionally, non-store holiday sales grew 11.1 percent. Shop.org in October forecasted a 12.0 percent growth in online sales in the months of November and December.
“For over six months, we’ve been saying that the fiscal cliff and economic uncertainty could impact holiday sales. As the number shows, these issues had a visible impact on consumer spending this holiday season,” NRF President and CEO Matthew Shay said. “We can’t expect consumers to continue to carry the burden of growing our economy—Washington must put political differences aside and do what it takes to get our country growing again and Americans back to work.”
December retail sales, released today by the U.S. Department of Commerce, showed total retail and food services sales (which include non-general merchandise categories such as automobiles, gasoline stations, and restaurants) increased 0.5 percent seasonally adjusted month-to-month and increased 4.7 percent adjusted year-over-year.
“While non-store retail sales increased a hearty 11 percent this December, total December sales could not make up for shortfalls in certain categories like electronics,” NRF Chief Economist Jack Kleinhenz said. “Heading into 2013, consumers could continue to think twice about their discretionary purchases as they face decreases in their paychecks and other concerns with their household budgets.”
Other findings from the December retail sales report include:
• Clothing and clothing accessories stores’ sales increased 1.0 percent seasonally-adjusted month-to-month and increased 2.5 percent unadjusted year-over-year.
• Electronics and appliance stores’ sales decreased 0.6 percent seasonally-adjusted month-to-month and decreased 0.4 percent unadjusted year-over-year.
• Furniture and home furnishing stores’ sales increased 1.4 percent seasonally-adjusted month-to-month and increased 3.0 percent unadjusted year-over-year.
• General merchandise stores’ sales were unchanged seasonally-adjusted month-to-month and decreased 3.4 percent unadjusted year-over-year.
• Health and personal care stores’ sales increased 1.4 percent seasonally-adjusted month-to-month and decreased 0.7 percent unadjusted year-over-year.
• Nonstore retailers’ sales increased 0.5 percent seasonally-adjusted month-to-month and increased 9.6 percent unadjusted year-over-year.
• Sporting goods, hobby, book and music stores’ sales increased 0.6 percent seasonally-adjusted month-to-month and increased 4.7 percent unadjusted year-over-year.
After Tough Christmas, Retailers Squeeze Last Business Out of Season – California Apparel News
December 27, 2012
The initial reviews of this year’s holiday retail business were mixed.
The season saw last-minute shopping, which had retailers biting their nails for the weeks leading to the end of the holiday, said Fraser Ross, owner of the Kitson chain of specialty boutiques headquartered in Los Angeles.
“We were on pins and needles,” Ross said. Many retailers were on edge debating on whether to offer more promotions. But relief came on the last Saturday before Christmas, and consumers crowded stores. “It beat Black Friday,” Ross said.
The manic highs and lows of the season affected retailers across the nation, according to ShopperTrak and other leading economic-analysis groups.
Chicago-based ShopperTrak said foot traffic for the week ending Dec. 22 skyrocketed 32 percent over the previous week.
But compared with the same week last year, retail sales declined 2.5 percent and foot traffic dropped 3.3 percent, ShopperTrak found.
An index tracked by the International Council of Shopping Centers and Goldman Sachs also found mixed results. For the week ending Dec. 22, ICSC found retail sales increased by a wan 0.7 percent over the previous week. However, compared with the same week last year, sales increased by 3.2 percent, the ICSC index found.
Retailers and analysts hoped the last week of the year would be a shopping spree when consumers equipped with gift cards had the means to splurge on themselves, said Matthew Shay, chief executive officer of the National Retail Federation. “The week after Christmas is one of the biggest weeks of the year, and given the bargain-hunting mentality we’ve seen these last few weeks, we could see some strong shopping levels over the next few days,” he said.
Revenue from the last week of December can make up from 10 percent to 15 percent of holiday sales activity, said Adrienne Tennant, an analyst with Janney Capital Markets, in a Dec. 27 research note.
She also found that the 2012 holiday discounts and promotions did not give away the store. They were even with last year or, in some cases, less, she said. However, the promotions could still be generous. Abercrombie & Fitch offered discounts of up to 50 percent from Dec. 21 to Dec. 24. At Chico’s, one sale offered up to 60 percent off and an extra 30 percent off of already-reduced merchandise.
However, promotions could cut into retailers’ profits, said Jeff Van Sinderen, an analyst with B. Riley & Co. Even if 2012 promotions were even with last year, Van Sinderen argued that this year’s promotions lasted longer than the previous year and got more aggressive the last few days before Christmas.
This season’s shopper procrastination should not have been a surprise, Van Sinderen said. “The consumer has been trained by the retail industry to wait until the big sale and wait until the last minute,” he said. “They took advantage of aggressive Black Friday promotions, then went into hibernation. Then they took advantage of increased promotional levels the final weekend before Christmas.”
This year’s business was made tougher by the still-sluggish economy and national tragedies, which dominated headlines around the globe. Across the board, economists forecast that anxiety over the “fiscal cliff” would put a damper over holiday shopping. The fiscal cliff refers to a series of federal tax hikes and spending cuts that will go into effect in 2013 if current tax and budget laws are not changed.
Devastation from Superstorm Sandy reverberated throughout the national economy after the storm hit New York City on Oct. 29 and created more than $65 billion in damage on the East Coast. A national outpouring of grief after a massacre of schoolchildren in Newtown, Conn., on Dec. 14 also took a heavy toll on consumers, Ross said. “They didn’t want to shop after that,” he said. “The shooting and Sandy had a giant emotional effect on people. You do not buy for yourself when you see hardship on TV.”
However, December remains one of the top months for shopping. At Citadel Outlets, near downtown Los Angeles, parking lots were full throughout the month for this mall of off-price retailers, said Nicole Arend, a mall representative. Some boutiques, such as Harper’s boutique in Corona del Mar, Calif., also reported profits even though no discounts were offered. Fred Levine of Agoura Hills, Calif.–based contemporary chain M.Fredric said his business increased 20 percent compared with the 2011 Christmas season. “[We’re] hoping the consumer remains upbeat,” he said about 2013 business.