Retail holiday sales look brighter but no blockbuster
— -- So it's looking like it will be a prettyMerry Christmas after all — for both consumers and retailers.
Final numbers won't be out until Jan. 12, but estimates of both in-store and online retail sales suggest shoppers ignored many of the lingering economic warning signs. But all that spending doesn't equal a blockbuster holiday season, when higher consumer prices are considered.
"It's about average and a lot better than it was three or four years ago," says Chris Christopher, senior principal economist for IHS Global Insight. "It looks okay, but when you take price increases into account, it doesn't look too good."
The National Retail Federation on Dec. 15 raised its estimate for holiday sales to a 3.8% increase from 2010 — a full percentage point above its previous 2.8% estimate — buoyed by the strong sales in October and November, especially for the Thanksgiving weekend.
Online sales for December will be up about 10% over December 2010, IBM Smarter Commerce estimated this week based on its analysis of transactions on 500 retail sites.
IHS Global Insight expects holiday sales to be 4.9% higher than last year. But Christopher says nearly half of this increase is due to higher prices and warns income isn't keeping up with spending. Consumer spending adjusted for inflation grew almost 4% in the fourth quarter last year while prices were declining, he says. For the fourth quarter this year, Christopher says he only expects growth of about 2.5%.
Weekly retail sales increases over 2010 have been strong, but not as staggeringly good as they were for Black Friday weekend. ShopperTrak, which estimates in-store holiday sales, says last week's sales were up just 1.2% when compared with the same week a year earlier, but that represented a 22% increase over the previous week. That suggested shopping was increasing after a brief lull.
With the extra Saturday on Christmas weekend to shop, ShopperTrak founder Bill Martin predicted "shoppers will be ready to spend the rest of their holiday budgets."
Retailers readying sales
Stores were gearing up for after-Christmas sales as they prepared for last-minute Friday and Saturday shoppers. The volume of email sent by retailers was up 34% this week through Thursday compared to the same period last year, marketing software company Responsys said Friday. Responsys attributed the increase to high inventory levels, which BradsDeals.com founder Brad Wilson agreed should lead to good post-Christmas deals.
"Inventory is never a bigger concern for retailers than the last week of the year, which makes it one of the best times all year for us as consumers to shop," says Wilson. "I expect significant discounting on select products."
Target said Friday that it would give an additional $10 off to anyone who redeemed a gift card or used a promotional code online Christmas Day. The discounter also planned to cut prices on clothes, home goods and holiday decorations by up to 50% starting Dec. 26.
While stores are increasingly pushing consumers to their websites before Christmas, they are more frequently offering in-store-only deals during after-Christmas sales, says DealNews.com feature director Lindsay Sakraida. The move is clearly an attempt to convert those returning gifts to purchasers.
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