Holiday shopping season is strong

Published 4:17 pm Thursday, December 22, 2011

The holiday shopping season is wrapping up to be bigger than anyone expected. Now, retailers are holding their breath and hoping consumers will keep spending in the final days before Christmas.

Sales from November through Saturday rose 2.5 percent, compared with the same period a year ago, according to research firm ShopperTrak, which did not give a dollar figure. Online, shoppers have spent almost $32 billion online for the holiday season so far, a 15 percent increase from a year ago, according to comScore, which tracks Web use.

The increases are good news for retailers, but they’re not out of the woods just yet. The final week before Christmas, which includes four of the top 10 holiday shopping days, can account for up to 20 percent of sales for the season.

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“I don’t think anybody has claimed victory yet, but very few are writing concession speeches,” said Arnold Aronson, managing director of retail strategies at consulting firm Kurt Salmon. “This Christmas will not be a blowout, but despite all the nervousness about the economy, it will be a decent Christmas.”

This is the most important time of year for retailers. They can make between 25 and 40 percent of their annual sales in the last two months of the year. And this holiday season, stores are expected to ring up $469.1 billion during the holiday season, according to the National Retail Federation, nation’s largest retail trade group.

Heading into the holidays, retailers were nervous that Americans were so scared about another recession that they wouldn’t do much shopping. In fact, consumers themselves told consulting firm Deloitte in September that they planned to spend about 5 percent less on Christmas this year.

That led stores to panic. They began discounting earlier in the season, opening as early as Thanksgiving Day, and offering profit-busting incentives, including free shipping on clothes and juicy financing deals on furniture.

Despite all the worrying, though, the season has been a lot brighter than expected.

At Taubman Centers, which operates 26 malls in 13 states, retailers’ year-over year sales on average are up mid-single digits through last weekend. Mall of America, North America’s largest shopping center, has also seen “healthy” increases in customer counts and sales, said spokesman Dan Jasper. And Stephanie Sack, the owner of a clothing boutique and shoe store in Chicago, said business has improved.

“People in my world are still shopping,” Sack said.

As a result, the National Retail Federation recently upgraded its forecast for holiday sales to increase 3.8 percent, up from its 2.8 percent forecast in October. Such an increase — below last year’s 5.2 percent spike over 2009 — would still be above the 2.6 percent average gain over the last 10 years. ShopperTrak also raised its forecast to a 3.7 percent increase in sales, up from its estimate of 3 percent before the season started.

There’s a reason for the renewed confidence. After all, Americans spent $52.4 billion alone over the four-day weekend starting on Thanksgiving. It was the highest total ever recorded for that period, according to the NRF.

Shoppers appear to be more willing to spend this holiday season after having cut back during the weak economy.

Lynn Vance, for one, was excited to shop this year after landing a new job at a clinical research firm. Vance, 36, said she and her friends were struggling with recession fatigue, itching to mark the occasion after years of contending with the economy’s downturn.

“Last year, I was unemployed,” Vance, who lives in Chicago, said. “This year, I have money and I want to share my happiness with others … I think you can only say crouched in the position of uncertainty for so long, eventually have to act.”

Still, retailers are cautiously optimistic. After all, shoppers still are very budget-conscious and are looking for bigger discounts. In a poll of 1,000 shoppers by America’s Research Group ahead of the holiday shopping season, 78 percent said they were more driven by sales than they were a year ago. During the financial meltdown in 2008, that figure was only 68 percent.

“Shoppers are waiting for prices to plunge,” said Brian Sozzi, an independent retail analyst.

They’re also more likely to have buyer’s remorse this year: For every dollar stores take in this holiday season, they’ll have to give back 9.9 cents in returns, up from 9.8 last year, according to the NRF’s survey of 110 retailers. In better economic times, it’s about 7 cents. That’s a big deal because fractions of pennies can add up quickly when you’re talking about millions of dollars.

“The consumer is cautious and thoughtful and very responsive to discounting,” said Richard Jaffe, an analyst at Stifel Nicolaus. “That’s what makes retail managers nervous.” 

Indeed, Lindsay Gaskins, CEO of Marbles: The Brain Store, said the 18-location chain that sells games and puzzles has done well during the season. Still, she’s cautious about the remainder of the season.

“I think people are ready to buy,” she said. “But it’s still a bad economy.”

Case in point: Marisa Pinto of Kearney, N.J., spent $600 at Old Navy, Toys R Us and Wal-Mart over Thanksgiving weekend on gifts for her fiance’s two young daughters. But she’s run out of money, so she decided to pay only half of the total due on her monthly bills to free up another $300 to buy a gift for her fiance.

“I went through most of the money I had saved,” the 28-year-old corrections officer said. “I am having trouble finding money for the rest.”