Considered as the biggest sales season for the year, holiday buying has pumped up the fourth quarter results of many retailers in the past. In fact, for some retailers, the holiday season can represent anywhere between 20-40% of annual sale. Despite the slow market conditions in the US, market research group National Retail Federation (NRF) had projected holiday sales to rise 4.1% from 2011, as there was lots of pent up demand, which market watchers expected to come forth during Christmas. Yet, though many retailers did post very positive results, the sales over all could register growth of only 2.5 per cent during the 2012 holiday season, helped mostly by a late surge in store visits in the days right before Christmas, according to retail tracking firm ShopperTrak.
The winter/holiday clothing which usually arrives in stores from late October to early November was seen quite early this year at many stores. The effort was to give the customer time to decide and make informed decisions in a spaced out manner, rather than putting a financial burden at the last minute.
This strategy backfired and in contrast to last year, when about 40% of consumers began their holiday shopping before Halloween, stores this year posted soft results as the consumers held back their holiday purchases until the last minute, and in many cases did without them altogether.
Same-store sales results for the month generally came in below expectations that had already been rendered modest by shoppers who procrastinated and waited for sales throughout the holiday season.
Holiday shopping season: Overall results from various holiday surveys
- 9% of consumers said that they spent less on Christmas holiday shopping merchandise because of Hurricane Sandy, according to a Reuters/Ipsos poll.
- The busiest shopped day for Walmart, Macy’s and Kohl’s was Sunday, December 23rd, according to Placed.com.
- Holiday sales rose 0.7% between October 28th through December 24th, 2012 according to Spending Pulse. Sales rose 2% in that same time period in the 2011 Christmas holiday shopping season.
- Seasonally adjusted sales for the five weeks of November to December were up 2.5% compared to the same time period of 2011, according to the Johnson Redbook Index.
- 57% of consumers polled said they spent the same during the 2012 Christmas holiday shopping season as they did in 2011. Only 17% said they spent more, and 19% said they spent less this year than they spent last year.
Many experts feel that Hurricane Sandy did not just hit the American mainland; it carried forward its catastrophe to the garment business. Assisting it were other deterrents like the Newtown shooting, blizzard in the upper Midwest, and the concerns over the fiscal cliff, all put together dampened the prospects of a coin jingling holiday season for the clothing trade, restricting the expected flight to a significant extent. Retail industry sales for the 2011 holiday season had increased 4.1%, year-over-year, to US $ 471.5 billion, according to the National Retail Federation.
Twenty retailers reported that revenue at stores open at least a year, a figure that indicates a retailers’ health, rose an average of 4.5 per cent in December compared with the year-ago period, according to the International Council of Shopping Centers. That’s on the high-end of the expected range of 4 per cent to 4.5 per cent. Only a small group of stores representing about 13 per cent of the US $ 2.4 trillion US retail industry report monthly revenue, but the data offers a snapshot of consumer spending.
“I wouldn’t be doing cartwheels that it was a particularly great or strong holiday season, but it could have been worse given the headwinds,” said Ken Perkins, President of Retail Metrics, a research firm. “The Government and Mother Nature were not as co-operative as retailers would have liked. But it was definitely not as bad as feared.”
December’s results provide a brighter picture than reported earlier in the month that proclaimed that the holiday shopping season was shaping up to be the worst since 2008 when the US was in a deep recession. While sales were weak at the beginning of November in the wake of super storm Sandy on the Northeast and the US presidential campaign, there was a surge during the four-day thanksgiving weekend. Spending fell off after that until a shopping rush around right before and after Christmas when some stores began offering bigger discounts. “That last-minute shopping, coupled with post-Christmas bargain hunting and early gift-card redemption helped propel sales at the end of the month,” said Michael P. Niemira, ICSC’s chief economist.
Indeed, weary holiday shoppers forced retailers to heavily discount items during December, ultimately handing merchants decent sales but raising worries about consumer spending in the New Year. While, major chain stores posted a 4.5% sales increase in December compared with the same month a year earlier, beating analysts’ expectations of a 3.3% rise, according to Thomson Reuters’ tally of 17 retailers, most of them sacrificed profit by aggressively marking down merchandise to lure people into stores. Strong sales did not always translate into profitable holiday season for some companies. Several chains, including JCPenney, Target and Kohl’s, lowered their forecast for fourth-quarter profit, warning that larger-than-expected discounts may affect their year-end results.
One segment that registered encouraging results was online sales, according to comScore, e-commerce spending for the entire holiday season grew to US $ 42.3 billion, a 14 per cent increase over the same period in 2011.
However there is a flip side and retailers enjoying a boost from rising online sales in December may suffer a hit in January as shoppers return unwanted goods. Up to 40% of clothing and between 5% and 10% of electrical goods and home wares bought via the Internet or catalogues are returned to stores by shoppers who change their mind.