Season Started, Stores Upbeat
Retail experts sized up the start of the holiday shopping season over the weekend, expressing optimism that the first three days of sales would stack up well against last year, thanks in part to heavy discounting and extended store hours.
Wal-Mart Stores Inc. projected that comparable-store sales would be up 4.3% in November from a year earlier, helped by a strong start to the holiday season. The world’s largest retailer had previously forecast an increase of 3% to 5%. The company said its top sellers included computers, portable DVD players, video games and dolls.
America’s Research Group described Friday morning -- the traditional start of the holiday season -- as a “Category 5” shopping hurricane that petered out as the day progressed. Still, Chairman Britt Beemer predicted that sales for the weekend would be up 3% to 5% from a year earlier.
One note of caution came from ShopperTrak RCT Corp., which monitors more than 45,000 retail outlets. The firm said Saturday that sales actually slipped slightly the day after Thanksgiving from last year’s strong performance on that day.
Visa USA reported that retail spending on its credit and debit cards rose 11.4% to $3.7 billion Friday and Saturday, though greater use of Visa cards might account for some of that increase. A year ago, Visa reported a 13.9% increase for the first three days after Thanksgiving.
Whatever the weekend’s results, they don’t necessarily foreshadow the overall season, said Michael Niemira, chief economist for the International Council of Shopping Centers and a consultant to ShopperTrak.
November and December, key months for retailers both for sales and profit, can be volatile. Last year, for example, shoppers made a run on the malls the Friday after Thanksgiving, sending sales up 11% from a year earlier. But the following day, sales fell 6.5% from the Saturday after Thanksgiving in 2003.
“It’s always hard to read one day, one weekend, because we’ve gone through periods where you have a strong start followed by this lull,” Niemira said. “What’s far more important over the next few weeks is to see how much of a lull there is in the sales pace.”
Those weeks are crucial for retailers because they will determine whether they will be forced to discount more than they planned, Niemira said.
The shopping center group will release last week’s sales at stores open at least a year, a key measure of retail performance, on Tuesday and follow with sales for all of November on Thursday.
Retailing’s largest trade group offered a surprisingly upbeat assessment Sunday of the start of the holiday shopping season, saying Americans planned to spend 22% more during the three-day weekend than they did last year.
But neither the National Retail Federation nor other industry experts raised their sales predictions for the season. Indeed, other retail watchers remained much more cautious in their assessment of how sales were shaping up.
“There’s no way that we’re going to be at 22% or I’ll eat my hat,” said Beemer of America’s Research Group. “It’s just not even credible.”
Even the retail federation was “incredibly surprised” by its poll results. “We would have been happy to see increases of between 6% and 10%,” spokeswoman Ellen Davis said. “I don’t think anybody was expecting 20%.”
The retail federation recently raised its holiday projection, saying it expected sales to rise to $439.5 billion, an increase of 6% from 2004. Earlier the group had predicted a 5% gain.
Its survey of 4,200 shoppers through Saturday night found that they planned to spend $302.81, on average, during the long weekend. That would bring weekend sales to $27.8 billion.
Deep discounts pulled more than 60 million people into malls and stores the day after Thanksgiving, a 7.9% increase from 2004, the retail federation said. Clothing and accessories attracted the greatest percentage of shoppers, followed by books, CDs and video games. Consumer electronics and computer accessories showed the strongest growth, rising almost 18%.
Although discount stores attracted the most shoppers, their share of the overall traffic fell 1.1 percentage points from last year. Traditional department stores attracted a growing proportion of the shoppers, 2.7 percentage points more than in 2004, perhaps benefiting from earlier openings and early-bird specials, Davis said. “I think the big discounts got people out of bed,” she said. “The retailers who opened early are the ones who were the big winners.”
Beemer said his most recent survey showed that almost two-thirds of those polled stayed within their budgets over the weekend, despite the tempting discounts.
Of those who shopped Friday, most were buying early-bird specials and finished shopping by noon, he said.
Ultimately, the experts say, it’s still early in the game. “It’s really up to the consumer over the next few weeks to make or break the season,” Niemira said.
