Americans Are Holding Back This Holiday Season

Why retailers have hung their holiday hopes on last-minute shopping.

ByABC News
February 9, 2009, 10:00 AM

Dec. 17, 2007— -- 'Tis the season of generosity, and retailers are slashing prices and extending hours to accommodate holiday gift-givers. Yet from Los Angeles to Chicago to New York, holiday shoppers are doing the unthinkable -- they're tightening their belts and holding back.

After a blistering Black Friday, the retail frenzy has slowed to a crawl, which is an ominous sign, especially in the crucial week leading up to Christmas. Sales of women's clothing, an important barometer in this shopping season, were down nearly 6 percent the first half of the Christmas season.

There are no must-haves, and even the best sellers aren't all that new. The Nintendo Wii, UGG boots and flat-screen TVs are all reruns from Christmas past. Retailers' Christmas discounts aren't as impressive as in past years.

"Retailers are holding back on giving the big discounts that consumers want this year, and as a result retail sales are very weak," America's Research Group's Britt Beemer said in a statement.

The weather hasn't helped either. A massive snow and ice storm that stretched from the Midwest through New England cooled sales this past weekend as people holed up in their homes.

And not even the horrendous weather has given Internet sales the boost they needed. ComScore Inc. reported that online sales from Nov. 1 to Dec. 14 rose only 18 percent -- which is less than the 26 percent sales boom last year or the 20 percent in 2005.

The explanation? The housing crisis has crippled some shoppers who aren't as willing to shell out cash amid worries about inflation and the rising costs of essentials such as food and gasoline.

"Over the last 12 months, we've basically had a doubling of the cost of living based on what we've been used to," Joseph LaVorgna said.

On average, retailers say shoppers have completed about half of their holiday spending. The National Retail Federation said it anticipates just a 4 percent rise in sales. But with just over a week left -- including an important weekend -- it's hoping for a strong finish.