Retailers Expect Post-Holiday Burst

Dec. 26, 2006 — -- Christmas may be over, but the shopping continues.

Returns, gift cards and big discounts draw shoppers back to stores the week after Christmas and well into January.

Robert Drbul, retail analyst at Lehman Bros., said that Dec. 26 to New Year's Eve now represents 10 percent of holiday sales, while January makes up 20 percent of holiday sales for the season.

Retailers eagerly await these shoppers and have stocked their shelves with new merchandise at full price, hoping that consumers will buy the newer items and not the deeply discounted ones like sweaters and jackets that have sold poorly because of the warm weather throughout most of the country.

Gift Cards Keep Giving

The International Council of Shopping Centers, a retail trade group, estimated in October that gift cards in 2006 would account for $30 billion to $40 billion in holiday sales. Last holiday, customers redeemed nearly 40 percent of gift cards between Dec. 26 to Dec. 31st. In January, 38 percent more were redeemed.

The National Retail Federation, however, estimated that gift card sales would be slightly less, reaching just under $25 billion, for this holiday season. That represents 8 to 9 percent of holiday sales for the year.

Daniel Horne, a professor at Providence College who has studied gift cards extensively, estimated that the average gift card value would be around $37-$38 this year but could vary depending on the retailer. More important, Horne calculates that people spend about 40 percent more than the value of the gift card.

Horne believes that 25 percent of gift cards are redeemed the week after Christmas and that two-thirds are used by the end of January.

Holiday Shopping

At the start of the holiday, the National Retail Federation forecast that sales would exceed $457 billion in November and December, a 5 percent increase over 2005.

That prediction fell in the middle of those by various industry analysts who estimated anywhere from 3 to 7 percent growth.

So far, sales figures reported by various tracking groups have fallen a bit short of earlier estimates.

SpendingPulse, a data tracking service of MasterCard, estimated that sales between Thanksgiving and Christmas were up 6.6 percent compared with last year. In 2005, holiday sales were up 8.7 percent compared with 2004.

In a statement, Michael McNamara, vice president of research at MasterCard Advisors said, "Overall, sales during the holiday season can generally be categorized as soft."

This past weekend ShopperTrak, a Chicago firm that tracks retail sales at malls and retail outlets, said sales on the Saturday before Christmas totaled $8.72 billion. This figure does not include sales at big warehouse stores like Wal-Mart.

As of last week, ShopperTrak reported that average weekly sales in December were up 4.3 percent, just below its sales estimates for the month.

And comScore Networks, which tracks online sales, found that from Nov. 1 to Dec. 20, Internet sales were up 26 percent to $21.7 billion in sales.

Sales figures will continue to trickle in this week and next. The big day will be Jan. 4, 2007, when most of the publicly traded retailers will release their sales data for the month of December.