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Retail Sales Strong Heading Into Final Days Before Christmas

Cash registers are continuing to ring up big sales in the final days before Christmas, easing fears of a front-loaded holiday season.

Customer Growth Partners President Craig Johnson expects this holiday season to surpass 2007's total sales record of $508 billion. This means that not only will this holiday season post the strongest year-over-year growth since 2005's 6.1 percent gain, but it could be the best since 1999's 8.8 percent increase, he said.

"If Christmas retail does indeed approach anywhere near the 1999 growth rate, it will have significant broader economic implications, given that the consumer is 70 percent of the economy," Johnson said. "In 1999, when retail sales rose 8.8 percent, fourth-quarter GDP growth was 7.4 percent, and the following full-year 2000 growth rate was a solid 4.1 percent."

Mastercard Advisors' SpendingPulse, a macroeconomic report tracking retail and services sales across all payment forms, said the sales in the first two weeks of December continued November's momentum.

Some of the strongest growth is coming from eCommerce and apparel sales, according to SpendingPulse. The report found eCommerce sales rose 13.5 percent and apparel sales were up 9.8 percent from the start of the holiday season through Dec. 11 compared with the same period a year ago.

Much the growth in apparel has coming from sales of men's and women's clothing, with women's apparel purchases up 4.4 percent and men's apparel sales up 8.4 percent.

Jewelry and luxury sales also are posting gains. Jewelry sales are up 2.6%, while the rest of the luxury category posted a 2.8 percent gain over the same period last year.

Consumer Nation - Holiday Central Edition - See Complete Coverage
Consumer Nation - Holiday Central Edition - See Complete Coverage

Jewelry sales have been trending upward, which bodes well for this week, when the bulk of the holiday jewelry purchases tend to be made.

About 40 percent of December's retail jewelry sales occur in the seven days before Christmas, according to Mike Berry, director of industry research at SpendingPulse.

But electronics sales continue to be hurt by lower prices for flat panel televisions. Sales for the season-to-date are only up 0.4 percent from last year.

"They are under a lot of pricing pressure, especially compared with last year," Berry said. "There is only so much that can be overcome by the increase in volume."

There is some time to shift the balance. According to ShopperTrak, about one-third of all holiday sales occur during the last week of the holiday season.

No doubt many are waiting for big bargains, but discounts aren't likely to be as deep as last year.

A new survey by Nielson shows that 46 percent of Americans will be shopping this week. One fifth of them said they waited in order to get last-minute deals. (Some 18 percent said they waited because they enjoy shopping the last week of the shopping season.)

Nielson has been expecting a more balanced level of essential and discretionary spending this holiday season, and they were expecting online retailer to experience the biggest surge in sales. That looks like it is playing out.

Promotions have been a big part of the online shopping story, with retailers planning several big promotional events such as "Free Shipping Day," which occurred on Dec. 17. On that day, more than 1,500 merchants participated in the event by offering free shipping and other deals to customers.

Despite these events, online promotions have been very targeted this year. Some offers go to selected customers; others are having mystery sales. But clearly there aren't signs of retailers looking to clear out inventory at any cost, and that's encouraging.

ComScore is projecting that $27.46 billion has been spent online in the first 47 days of the November to December holiday season, which is a 12 percent increase compared with the same period last year. However sales in the most recent week ended Dec. 17 reached $5.15 billion, a 14 percent increase from the corresponding week last year.

There were four individual days last week where sales topped $900 million. The strongest was so-called Green Monday (Dec. 13) with $954 million in sales and Free Shipping Day with $942 million.

The promotion behind Free Shipping Day made the event much larger than it was last year. Sales were up 61 percent than the corresponding shopping day last year, showing the appeal of free shipping offers.

Retailers have been looking for ways to make it easy for consumers to shop, and deadlines for online offers have been extended by many retailers. Wal-Mart Stores has extended free shipping on nearly 60,000 items, including all electronics with no minimum purchase through 11:30 p.m. Pacific time Monday.

But these extensions may be signs of scrambling. Johnson said the strength of this season's sales are helping retailers across the board, but he sees Wal-mart, Sears , Gap , and Talbots as notable exceptions.

Questions? Comments? Email us at consumernation@cnbc.com

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