A few bright spots as holiday sales slow
Justine Griffin/Sarasota Herald-Tribune
Holiday sales slowed this year, leaving retailers with a lackluster season despite doorbuster promotions, extended hours and other incentives.
Retail sales on popular gift items grew by 0.7 percent for the two months before Christmas, compared with a 2 percent growth in 2011, according to MasterCard Advisors SpendingPulse.
But even with more shopping days between Thanksgiving and Christmas this year, sales were off, hampered by the presidential election in November, the damage caused by Hurricane Sandy in October and the uncertainty surrounding the so-called “fiscal cliff” of budget cuts and tax increases.
Locally, there were bright spots:
The Best Buy store in Bradenton saw more traffic in stores than the year prior, said store manager Ciaran Farrell.
To lure shoppers, Best Buy offered extended hours and new incentives this year to purchase online and pick up gifts inside stores.
“We continued to offer a lot of the same deep discounts you saw on Black Friday into December,” Farrell said, noting this was the first time the retailer had offered such promotions for such a lengthy period.
“It really drove a lot of people into the store.”
Popular items this year included the Apple iPad Mini and other tablets, along with gaming systems like Xbox and the Nintendo Wii, Farrell said.
But overall, especially nationally, foot traffic and sales were down compared with 2011, according to ShopperTrak, a research firm that focuses on foot traffic.
Sales were off by 4.3 percent mid-month, the latest data available, ShopperTrak data show. Malls in particular suffered, with the number of visitors down by 4.4 percent in mid-December compared to 2011.
The numbers could reflect the growing acceptance of online shopping, which posted a record year.
“Sales have been disappointing and profits are going to be hurt, despite the deep discounting we’ve seen going on the last week or so,” said Jeff Green, a retail analyst with Phoenix-based Jeff Green Partners. “It just wasn’t enough to make up for those quiet weeks after Black Friday.”
The Florida Retail Federation predicted a 5 percent increase in holiday sales for the state, while the National Retail Federation expected $586 billion in total holiday spending, a 4 percent increase over 2011.
Sales fell after Black Friday for two straight weeks, according to the International Council of Shopping Centers, a routine dip that ultimately spread out longer than usual in the weeks leading up to Christmas.
Although sales were up by 4.3 percent as of mid-December, shopping fell off in the last-minute rush just before the holiday, data show. During the week before Christmas, sales rose by less than 1 percent, according to the trade group.
In late November, the shopping center council anticipated an overall 4 percent growth in December, year-over-year.
Some retailers did appear to outpace the pack.
Bradenton-based Bealls department stores anticipated low double-digit growth this holiday season, said spokesman Bill Webster, though he declined to provide exact sales figures. The chain reported a 41 percent spike in sales on Cyber Monday and hefty gains from Black Friday.
To combat sales malaise, many retailers have turned to deep discounting to attract shoppers, in the theory that those shoppers will, in turn, spend money on other, nondiscounted items.
But Michael O’Hara, CEO of online retailer Yumani, says the payoff is proving to be mixed.
“Retailers don’t make any money on those promotion pieces,” O’Hara said. “The problem is people don’t buy anything anymore unless it’s discounted, whether that’s in stores or online. So they come in for the promotions and leave without looking at anything else.”
Major brick-and-mortar stores like Macy’s, Kohl’s and Nordstrom experienced decreased sales just before Black Friday, some of which extended into the Christmas shopping season.
For the first time, Macy’s stores nationwide remained open for 48 hours during the last weekend before Christmas. Sales began at 7 a.m. Friday and lasted hour-by-hour through Sunday.
Macy’s was not alone. Toys R Us stores stayed open for 88 consecutive hours up until Christmas in an effort to draw shoppers.
“Desperate last-minute promotions like this did nothing but stir up ill will with employees. No one was shopping at Macy’s late in the night,” Green said. “I don’t feel like this is something they’ll institute again next year.”
Most merchants anticipated modest growth in holiday sales this year, with overall averages hovering in the 3 percent to 5 percent range.
ShopperTrak toned down an original prediction of 3.3 percent growth this Christmas season, shrinking its prediction to a more modest 2.5 percent rise vs. 2011.
Green, too, scaled back his original prediction of 3 percent to 5 percent holiday sales growth for 2012 to 2 percent to 4 percent.
“I’ve always been a little nervous about the fiscal cliff issue, but I think the general feelings surrounding the Newton, Conn., school shooting really took the wind out of everyone’s sails,” Green said.
He expects consumer confidence to fall further as a result of the tepid December sales, which will, in turn, further depress retail sales into 2013.
NOTEStartblamed for poor retail sales this season, analysts said.