A Mixed Holiday Shopping Season

Jan. 4, 2007 — -- The holiday shopping season started with a boom the day after Thanksgiving, went into a lull, and finished with a last minute bang. But in the end, it was not enough.

Thursday the nation's retailers reported sales figures for December, and many stores had lower than expected results.

"It's been good, not great, particularly because consumers at the low-end are really suffering from higher interest rates and higher prices on everything from apartment rentals to gasoline," said Burt Flickinger at Strategic Resource Group, a New York industry consulting group.

A slowing economy due largely to a slowing housing market led many Americans to feel the pinch from gasoline prices that were higher compared with a year earlier. As a result, many families held back this holiday.

But there were bright spots this season. "Luxury [stores] really carried the day," said Flickinger.

"The high-end consumer isn't truly concerned about housing prices and interest rates or inflation," said Robert Drbul, a retail analyst at Lehman Brothers. "They feel good with the state of the economy."

After stumbling earlier in the season, Wal-Mart turned to aggressive price discounts and heavy marketing, which resulted in a better than expected December.

The world's largest retailer reported that same-store sales for the month of December increased by 1.6 percent. That result was higher than the company's earlier predictions that the increase would be zero to 1 percent.

Same-store sales refers to sales at stores that have been opened for more than a year, and are considered a standard measure of retail sales.

While that was good news for Wal-Mart, its holiday growth was a bit anemic when compared with archrival Target's. The high-end, low-cost discounter had December same-store sales of 4.1 percent.

"Target does a terrific job of straddling the middle by matching Wal-Mart's prices and at the same time having cheap-chic products, shoes and accessories as good as midtier department stores," said Flickinger.