Holiday shoppers crowd 34th Street in New York.
The final holiday retail sales numbers won’t be out until January 12th, but analysts are anticipating that this will be a good year for retail, even if not a great one. The National Retail Federation adjusted its sales forecast for the all-important holiday shopping season, expecting US holiday sales to rise 3.8 percent this year to a record $469.1 billion, having anticipated a growth rate of 2.8 percent earlier. The 2010 holiday season saw sales increase 5.2 percent over 2009. While the numbers certainly look better than they did three or four years ago, given price increases, sales numbers are less rosy than they might seem. No other period during the year is as important to retailers as the holiday shopping season, which can make up to 40 percent of a retailers’ annual revenue.
The November Boost
The holiday shopping season got off to a bright start thanks to Black Friday, which saw a record number of shoppers this year. The total spending per shopper increased by 9.1 percent over last year, with shoppers spending $398.20 on average. Black Friday is notoriously promotional and this year was no exception -- deals to be had included a 42-inch Sharp 1080 LCD HDTV for $199.99 at Best Buy (initially listed at $499.99) and women’s cashmere sweaters at Uniqlo for $49.90 (normally $89.90).
While holiday sales were strong overall, there were signs that consumers remain uneasy about their financial future. Layaway, which began during the Great Depression and allows customers to reserve an item while making payments, is again on the rise. Wal-Mart reintroduced the program into its stores this year, and retailers like Kmart and Sears have revamped their layaway programs because of consumer demand. In the same vein, dollar stores and chains including 99 Cents Only and Family Dollar, have performed robustly this year.
Online Sales A Bright Spot
U.S. online sales were a bright spot for most retailers this holiday season. Shoppers spent $30.9 billion online from November 1st to December 16th, up from $26.9 billion a year earlier. Cyber Monday, the Monday after Thanksgiving, was the biggest online shopping day ever, according to comScore. Sales for that day rose 22 percent from last year to $1.25 billion. Cyber Monday sales topped $1 billion for the first time last year.
Luxury’s Strong Performance
With stores like Wal-Mart and Sears doing everything they can think of to lure low to middle-income shoppers into their stores, luxury retailers like Chanel and Gucci are actually reporting better than brisk business this holiday season. Deloitte, in its annual holiday survey of US households, found that those with an income level over $100,000 feel more upbeat about the economy's prospects than do those below. Neiman Marcus sold out of the ten 2012 Ferrari sports cars it offered in its Christmas book of fantasy gifts for a whopping $395,000 each. Saks Fifth Avenue reported a resurgence in full-priced selling. And Tiffany & Co., Coach Inc., and Polo Ralph Lauren's stock prices all jumped after reporting record sales numbers during Thanksgiving weekend.
Belts Tighten Overseas
While the holiday shopping season wasn’t absolutely spectacular in the U.S., it was a particularly bleak season for retailers in Europe. Deloitte estimates a .8 percent decline in holiday spending for Europe as a whole, and anticipates that Italians cut their holiday shopping budgets by as much as 3.2 percent. UK retail sales fell .4 percent in November from October, just as retailers entered the crucial holiday period.