We all know that U.S. retail sales depend on the Christmas season for as much as 40% of their annual revenue. But all signs are pointing to a rather dismal retail sales for Christmas 2013.
That’s Hope and Change for you!
ZeroHedge reports on Christmas Eve, Dec. 24, that average holiday spending is expected to decline for the first time since the Great Recession-Depression began in 2008, despite record promotions and an ever earlier start of the buying frenzy on Thanksgiving day instead of the traditional Black Friday after.
Although Black Friday is the busiest day of the year for U.S. retailers, the week before Christmas is traditionally the busiest week in the most important shopping season of the year. But Shoppertrack reported that retail traffic actually plummeted by an unprecedented 21% in the last week before Christmas, and in-store sales decreased 3.1% from the year before, dashing retailers’ hopes that the final stretch before Christmas would offset soft sales numbers earlier in the holiday shopping season.
ShopperTrak’s founder Bill Martin called the disappointing numbers “kind of staggering” and attributed the slump to strong sales in early November (an increase of 4.7% from 2012), bad weather in the Midwest and other central states, and an increase in virtual (i.e., online) window-shopping that prevented consumers from setting foot in mortar stores to look, feel and compare prices. But even online sales aren’t growing at the expected pace. Although online spending from Nov. 1 through Dec. 15 was up 9% from the same period last year to $37.8 billion, according to the most available data from comScore, that’s still below the 14% growth that the Internet research firm had forecasted for the season.
What Martin did not factor in is the plain fact that many Americans have discovered their health insurance costs have gone up, thanks to Obamacare, and as a result, have fewer dollars to spend on gifts.
But Martin is not revising his forecast of an overall growth of 2.4% in retail sales for November and December because he’s counting on the post-Christmas sales and redemption of Christmas gift cards. The latter are not recorded as sales until they are exchanged for merchandise. As many as 80% of shoppers had said they were planning to buy gift cards this year, which would total $29.8 billion.
USA Today reports that retailers across America are rolling out huge after-Christmas deals. Some online sales, including at Target.com and Kohls.com, actually started on Christmas Day.
Final sales figures for the Christmas holiday shopping season are expected in January.
FOTM is doing our own poll. How much did you spend on Christmas gifts this year?