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NEW YORK -- Despite last minute price cutting, retail sales across most categories declined due to shrinking consumer spending, according to holiday sales data released on Christmas Day.
Total retail sales, excluding automobiles, fell over the year-earlier period by 5.5 percent in November, and 8 percent in December through Christmas Eve, according to MasterCard Inc.'s SpendingPulse unit.
When gasoline sales are excluded, the fall in overall retail sales is a more modest 2.5 percent drop in November and a 4 percent decline in December. A 40 percent drop in gasoline prices over the year-earlier period contributed to the sharp decline in total sales, according to a report in The Wall Street Journal.
"This will go down as the one of the worst holiday sales seasons on record," said Mary Delk, a director in the retail practice at consulting firm Deloitte LLP.
The holiday retail-sales decline was much worse than the already-dim picture painted by industry forecasts, which had predicted sales ranging from a 1 percent drop to a more optimistic increase of 2.2 percent.
Luxury goods were hardest hit, with sales falling 21.2 percent, compared with a jump of 7.5 percent a year ago, when the economy had just begun to sputter. Including jewelry sales, the luxury sector plunged by a whopping 34.5 percent.
During the same period last year, overall retail sales rose a modest 2.4 percent. But this year, after a moderate uptick in shopping activity boosted by steep promotions the Friday after Thanksgiving, shoppers closed their wallets and reopened them only cautiously, worried by job losses, a sinking stock market and a recession climbing into its second year, reported the Journal.
The industry already saw a parade of retailers entering bankruptcy proceedings, such as Circuit City Stores Inc., and liquidating, including Mervyn's LLC and Linens 'N Things Inc. The weak holiday sales mean more chains are likely to follow suit next year.
On the positive side, the Labor Department released figures showing inflation-adjusted consumer spending inched up slightly in November as gas prices fell steeply. The personal savings rate also climbed in November. But saving more in the bank leaves less for splurging at the mall.
Among various retail sectors, the biggest losers were electronics and appliances, which fell a combined 26.7 percent vs. a 2.7 percent gain last year. Women's apparel slid 22.7 percent compared with a 2.4 percent drop a year ago. E-commerce showed the most resilience, with online sales falling just 2 percent. But it was still a disappointment compared with last year when online sales posted a 22.4 percent gain in the period. Convenience store sales were not broken out separately in the report.
The Journal also noted retailers soon may face yet another blow. In recent years, they have seen a big lift in post-Christmas sales as shoppers coming back to stores to redeem gift cards often spent more than the card amount to buy full-price merchandise. But Deloitte's holiday consumer survey last week found shoppers expected to spend only $151 on gift cards this season, a 24 percent drop from last year.