Retailers across the country swung their doors open early and wide today, with more price cuts aimed at attracting shoppers and salvaging a so far, dismal shopping season.
For weeks, American retailers have been upping the ante on discounts, attempting to get holiday shoppers to open their wallets. But one early look at sales figures indicate those desperate measures will not be enough to save the holiday shopping season for retailers in 2008.
The amount of money spent at the nation's retailers from Nov. 1 through Christmas Eve was down 5.5 percent to 8 percent compared with last year, according to MasterCard SpendingPulse, which tracks retail sales for all forms of payment, including check, cash and credit card.
"A difficult economic environment combined with difficult weather in the last few days made 2008 one of the most-challenging holiday seasons in decades," said Michael McNamara, vice president of research and analysis at MasterCard Advisors.
By comparison, during the 2007, 2006 and 2005 holiday seasons, SpendingPulse reported annual sales increases of 3.6 percent, 6.6 percent and 8 percent respectively.
The overall picture is slightly better when you remove gasoline sales. Part of the retail sales drop can be attributed to the steep drop in gas prices. The price of gasoline is down 45 percent compared with this time last year, according to the Energy Information Service. When gas sales are removed, overall retail sales are down about 2 percent to 4 percent.
McNamara said that retailers cut prices deeply to try to attract shoppers. It appears to have helped clear some inventory, he said, but didn't rescue retailers' bottom lines.
"It really puts you behind the eight-ball when you are discounting 40, 50, 60 percent," McNamara said.
Apparel: Some of the biggest sales were found this year on clothing, but that didn't appear to help. Overall apparel sales were down 19.7 percent, with women's apparel dragging down the sector with an astonishing 22.7 percent decline. Men's apparel was down 14.3 percent and footwear was down 13.5 percent. The one bright side, if there is one to be found, is that women's apparel didn't get worse in the final weeks despite bad weather around the country.
Electronics: Big-screen TVs weren't flying off the shelves this year. Overall, electronics and appliance sales were down 26.7 percent according to SpendingPulse. Sales for higher-priced items -- electronics costing $1,000 or more -- were down more than 30 percent.
"As you go up the price spectrum, you start to see that the growth rate deteriorates," McNamara said.
Online: Probably the brightest part of the holiday sales came online. Overall. e-commerce decreased 2.3 percent from last year. And in the last four weeks, sales actually increased 1.8 percent. McNamara said that the poor weather might have helped the Internet retailers.
In the key final days of the shopping season, the Northeast saw an ice storm followed by heavy snow, the Midwest had bitter cold weather and the Northwest had an usual winter storm.
Luxury: The biggest cutbacks in this recession came in high-end goods. Sales of luxury goods at jewelry, leather and department stores dropped 34.5 percent. Jewelry sales were particularly weak. When they are taken out, the luxury sector declined 21.2 percent.
McNamara said that jewelry sales depend heavily on the last five to 10 days of the season, and that the bad weather hit this sector particularly hard.