Dec. 28, 2012 at 2:48 PM ET
Sluggish holiday sales might give retail industry investors a headache, but they could prove to be a boon to consumers hunting for post-holiday bargains.
The early data on how much Americans spent this holiday is mixed. A MasterCard Advisors SpendingPulse report said retail sales in the two months before Christmas ticked up only 0.7 percent, well below the 2 percent growth it forecasted for this year, and even further from the 4 percent growth rate predicted by the National Retail Federation. NRF president and CEO Matthew Shay told CNBC in an after-Christmas interview that he still expected holiday season sales to come in at 3.5 to 4 percent higher than 2011 — not terrible, but not on par with last year’s 5.6 percent growth.
“It seems like sales didn’t turn out as well as what we expected going into the holiday,” said Joe Feldman, managing director and senior research analyst at Telsey Advisory Group.
That growth was unevenly distributed across the sector, though, and Feldman said there are more clear winners — and losers — this time than is typical. Analysts say discount retailers like Wal-Mart Stores Inc., Costco and the TJX family of brands did well. Online giant Amazon.com said the season was its “best ever.”
Part of the reason for the mixed message is that shoppers waited until the last minute to do their shopping. A mid-December survey published by Visa Inc. indicated that 73 percent of consumers still hadn't finished shopping, and a new Gallup poll found a spike in consumer spending in the days immediately before Christmas. Shay told CNBC he expected online shopping and post-Christmas gift cards sales (since shoppers usually spend more than the amount on the card) to bolster the final figure.
But some stores have already thrown Hail Mary passes. Shay said “retailers were sensing that the market was getting tougher,” which drove them to offer more promotions even before Christmas.
Lindsay Sakraida, features director at dealnews.com, said that the site had twice as many of the deep discounts it classifies as “Editor’s Choice” sales this year than it did last year.
“I think some of the middle-tier department stores... Kohl’s and JCP, we’re hearing a lot of markdown activity there,” said R.J. Hottovy, a senior retail analyst at Morningstar. Anxiety about the fiscal cliff dampened shoppers’ enthusiasm, especially at the high end, he said.
“What we’re hearing is that luxury sales were somewhat weak compared to expectations this holiday season. For better or worse, they’ve really been driving the recovery since the last recession,” Hottovy said. Bloomingdale’s (owned by Macy’s Inc.) has after-Christmas sales of up to 75 percent off, and Neiman Marcus is advertising 40 percent off sale items through Friday on its website. This is the same discount the high-end retailer offered last year, Sakraida said, although this year, it’s coming a couple of days earlier.
Hottovy called Superstorm Sandy a “convenient excuse” for retailers confronting lower sales, but he added that unusual weather patterns across the country including strong storm systems in the West and Midwest could have had an effect on sales. Feldman said the late onset of seasonally cold weather in the Northeast contributed to lower demand for winter clothes and sportswear.
“Outerwear will be at 75 percent off plus an additional 10 percent,” Marshal Cohen, chief industry analyst at NPD Group, said via email. “Also some sportswear will see similar deals.”
Specialty apparel stores, especially those that focus on women’s clothes, offered some of the biggest discounts. Ann Inc.’s Loft stores offered 50 off everything except for new arrivals. Feldman said Aeropostale and Chico’s stores began advertising discounts of 60 percent off right after Christmas.
In electronics, tablets and e-readers like Kindle Fire, which Amazon said was its best-selling product of the season, were popular, but consumers were lukewarm when it came to bigger electronics.
“Big-screen TVs didn’t seem to be as big a driver as in the past,” Feldman said. Even though retailers like Best Buy, Wal-Mart and Amazon did aggressive price-matching, a round-up of after-Christmas big-screen sales on HDGuru.com showed discounts of nearly 60 percent on some models.
"Best Buy just didn’t see great traffic this year,” Hottovy said. "I think that’ll show up when we start to see the final numbers." Consumers, he said, shifted to buying more on Amazon.com or directly through manufacturers this year.
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