Holiday Shoppers Remain Tightfisted
The pressure on retailers is escalating as shoppers take their time completing their holiday shopping, according to two key measure of retail sales. That's making it more likely that stores will see a rare drop in holiday sales from a year ago.
According to the International Council of Shopping Centers-Goldman Sachs index, same-store sales rose a modest 0.6 percent for the week ended Saturday from the previous week and slipped 0.4 percent compared with the year-ago period.
Same-store sales are sales at stores opened at least a year and are considered a key indicator of a retailer's health.
ShopperTrak RCT, a Chicago-based research firm that measures traffic at more than 50,000 retail outlets, reported that total sales for the week ended Saturday edged down 0.3 percent compared with last year.
Shoppers have been increasingly delaying their holiday buying in recent years, but this year, as they grapple with job losses and tightening credit, the recession is playing a major role in consumers holding back.
"Consumers are saying that they are not going to be buying," said Michael P. Niemira, chief economist at the ICSC. "It may turn out that as time gets shorter, the consumer starts crossing off people."
Niemira now believes that his forecast for December same-store sales—from unchanged to up 1 percent—might be a too optimistic. Earlier this month, Niemira slashed his holiday same-store sales forecast for the combined November and December periods to be down as much as 1 percent after stores reported a 2.7 percent drop in same-store sales. That marked the worst performance for any month since at least 1969, when the index began.
There doesn't appear "to be enough energy for consumers" to push retail sales beyond their 2007 level, said ShopperTrak co-founder Bill Martin.
Jeffrey P. Klinefelter, a PiperJaffrey analyst, said in a note to investors Tuesday that he expects holiday sales to fall in the low single digits this year. Widespread discounts are likely to continue, Klinefelter said.
"Promotional levels remain elevated across specialty retail and we anticipate price discounting will grow even more aggressive in the next (and final) nine days," he wrote.