Holiday Sales Return to Level Before Recession

Shoppers spent more money this holiday season than at any time since before the recession, according to preliminary retail data released on Monday.

After a 6 percent free fall in 2008 and a 4 percent uptick last year, retail spending rose 5.5 percent in the 50 days before Christmas, exceeding even the most optimistic forecasts, according to MasterCard Advisors SpendingPulse, which tracks retail spending.

The rise was seen in just about every retail category. Apparel led the way, with an increase of 11.2 percent. Jewelry was up 8.4 percent, and luxury goods like handbags increased 6.7 percent. There was even a slight increase in purchases of home furniture, which had four consecutive years of declining sales. The figures include both in-store and online sales.

“For the past year or two, when I’ve seen growth in one area, it seems to come at the expense of another,” said Michael McNamara, vice president for research and analysis at SpendingPulse. “Here, things are actually all moving in the right direction.”

Of course, the broad increase was driven in part by higher spending on necessities like gas and food. And even with the across-the-board gains, some categories like furniture and electronics have still not climbed back to their pre-recession levels.

It is also possible that blizzard conditions on the east coast might be keeping some shoppers away from stores during the vital post-holiday period, when stores typically try to capitalize on store traffic for exchanges, returns of gift-card redemptions.

Even so, the MasterCard data suggests that the pre-Christmas sales increase was the biggest in five years. Spending reached about $584.3 billion, higher than the $566.3 billion spent in that period in 2007. (Several major retailers will report December sales in the first week of January.)

The 5.5 percent rise beat even the retail industry’s projections. The National Retail Federation was expecting a 3.3 percent improvement (excluding automobiles, gas and restaurants), while the ShopperTrak research service anticipated a 4 percent increase.

“In the face of 10 percent unemployment and persistent housing woes, the American consumer has, single-handed, picked himself off the mat, brushed his troubles off, and strapped the U.S. economy on his back,” Craig R. Johnson, the president of the consulting firm Customer Growth Partners, wrote in an e-mail.

Analysts offered several theories for why spending has rebounded despite an unemployment rate that has remained stubbornly high.

Stocks have soared to their highest levels in more than two years, giving those with higher incomes greater freedom to spend. Luxury stores like Tiffany and Saks Fifth Avenue, for example, have been posting big sales increases.

Pent-up demand is also showing up among middle-income shoppers: In government surveys, consumers have been expressing rising confidence for the last five months.

The luxury segment started heating up in late summer, said Joel Bines, a director in the global retail practice at AlixPartners.

“That trickled down to the upper- to mid-tier consumer, and then the mid-tier consumer,” he said. Once the luxury market stabilized, confidence seems to have spread, “in the media, at work, with your friends,” he said.

The sales figures were bolstered by improved inventory controls among many retailers. After two years of heavy discounting, retailers cut down the number of products they held in stock rooms, in an attempt to train shoppers to buy items at full price rather than wait for sales, and the gambit seems to have worked.

Shoppers browsing through after-Christmas sales said in interviews that they were still hunting for deals, but they were also feeling the economy was stabilizing after three years of merciless uncertainty.

In Schaumburg, Ill., Gwen Hilsabeck rose at 4 a.m. Sunday for a 90-minute drive from her house in downstate Pontiac, Ill., through early-morning snow flurries to Woodfield Mall., northwest of Chicago.

“I bought two dresses on sale at Ann Taylor, and I bought four dresses on the clearance rack at Nordstrom,” said Ms. Hilsabeck, a hospice-company manager who said she had spent between $800 and $900 so far.

“I’m spending more on myself because I’m starting to feel a little more at ease,” she said, “and my 401(k) has stopped going down.”

Where the snowstorms were not a factor, stores prepared for a wave of shoppers using gift cards. At J.C. Penney, Dec. 26 is usually the second-biggest day of the year in terms transactions volume, including returns, exchanges and new purchases, said Myron E. Ullman III, chairman and chief executive of J.C. Penney.

J.C. Penney goes after teenagers, who are frequent gift-card recipients, on Dec. 26 by bringing in new merchandise. People “have got money in their hand if they’ve got a gift card,” Mr. Ullman said.

Indeed, gift cards continued to be popular this year, and some shoppers said they were trying to maximize their value by using them during after-Christmas sales.

“It lets you shop the day after Christmas, so you can save a lot of money,” said Shelly Lara, 42, an in-home nurse from Ashtabula, Ohio.

She said that even though her family was doing fine financially, the Cleveland Clinic, which owned her company, had announced some layoffs, and her husband’s company stopped contributing to his 401(k) for six months.

“There were some scares,” Ms. Lara said. “We wanted to make sure we got the most for our money.”

Stores seemed to have planned for the holiday season appropriately, with few resorting to the huge price slashing of the past couple of years.

“There was a good match between inventory and demand,” Mr. McNamara of SpendingPulse said. “I didn’t see any evidence of unusual discounting.”

For shoppers, that meant that the hunt for deals was a bit harder after Christmas this year.

“I remember a few years ago when you could double your money if you went shopping the day after Christmas,” said Kim Rayburn, 40, a hairdresser who was looking at costume jewelry at Forever 21 at Polaris Fashion Place in Columbus, Ohio, with her daughter Samantha, 12. “It’s not like that anymore. Now it seems just like a regular shopping day.”

(source:nytimes.com)

U.S. retailers playing catch-up

(Profile Facts) - Holiday sales have outpaced expectations so far for U.S. retailers, but stock pickers still see several retailers, including Wal-Mart Stores and Sears Holdings, as laggards days before Christmas.

The reasons range from making bad merchandising bets to not discounting enough early in the season to being out of step with fashion, analysts and investors said.

Wal-Mart converted garden centers in more than 2,000 U.S. stores to temporary toy sections just last week as part of an 11th-hour push to win last-minute holiday shoppers.

"They are clearly playing catch-up too late in the game," said Craig Johnson, president of Customer Growth Partners, adding that the No. 1 retailer has lost out to smaller rival Target Corp in many categories this year, including electronics, which was formerly a Wal-Mart strength.

"Wal-Mart said they (will) have a Christmas of socks and underwear, and that's what has been the case," he said. On the other hand, "Target has had an exceptionally strong season. They are operating on all cylinders."

Best Buy also lost some tech shoppers to Target and other discount rivals as a decision to focus on promoting pricier 3D televisions backfired. The retailer is now trying to change tack and advertise cheaper TVs.

"Best Buy is Target, Costco and Apple's gain," Shawn Kravetz, who manages Esplanade Capital, said.

CONSUMER FEELS BETTER

Best Buy is also being challenged by online sites such as Amazon.com, and Wal-Mart, which has dramatically increased its inventory in a move that likely took sales away from Best Buy, David Berman, president of Durban Capital said.

The holiday season started off with a bang as consumers flocked to stores on the day after Thanksgiving. As a result, the National Retail Federation and others raised their expectations for holiday sales.

The American consumer "feels a little bit better (but) she still needs the bargains," Patty Edwards, chief investment officer of Trutina Financial said.

Both Talbots Inc and American Eagle Outfitters Inc drew brickbats from retail investors for their fashion faux pas.

"It's not your mother's Talbots, it's your grandmother's Talbots," Edwards said, stressing that many of its recent ensembles "look cheap" or are completely out of vogue.

Christmas Shoppers Crowd Stores Last Weekend

The last weekend before Christmas is one of the biggest shopping weekends of the year as people headed out to grab those last minute gifts. Many shoppers were met with big crowds, and in some cases, big sales.

J.C. Penny Supervisor Duane McConnell says, "Last minute it's pretty much whatever's left on the table and as I said the MIP'S, Men In Panic come in here and they just need to go home with something."

But not all shoppers were in panic mode. There were plenty of gifts to choose from, and a lot of it was on sale. Some say they wait till the last minute on purpose.

Shopper Ann Reed says, "I kind of save it up for the week before so I have all week to finish up so I have no pressure no problem."

And at Kmart, some shoppers were just looking for bargains.

One shopper says, "We started back in June my wife and I started in June and we're just out looking for a deal, last minute markdowns."

Over at Target, last minute shoppers were greeted by long lines and busy aisles.

Shopper Miles Eason says, "100 percent doing last minute shopping. I put it off to the last minute and now I have no idea what to get of anyone in my family."

Target says last minute shoppers help make this one of the biggest sales weekends of the year. And while shoppers searched for gifts they say they brought along plenty of patience.

One shopper says, "It's been really hectic trying to get everything done the traffic, but the people have been real nice and everything so it's been great."

And with the stress of trying to find that perfect gift, retailers say their goal is to make the shopping experience as easy as they can.

McConnell says, "There are so many customers in here that we just really try to take care and touch base with each and every one and really try to make it like they're visiting someone's home."

Experts say the final ten days leading up to Christmas account for nearly one-third of total sales for the holiday season.

Cheap Christmas shopping

Discounting was something that didn't happen until after Christmas. This year, though, Santa's price-snipping elves have been out in force during the pre-Yuletide period, and evidence of their handiwork is to be found everywhere.

"Twenty-Five Per Cent Off Everything", blare the signs in my local Past Times store. "Fifty Per Cent Off Autobiographies", says W H Smith. And on www.direct cosmetics.com, they're selling 100 ml bottles of my mother's favourite Nina Ricci perfume, L'Air du Temps, at (look away now, Mater) £22 instead of £48.

Good news, then, for skinflints such as myself, although there are still some traditionally-minded people who feel there is something a bit, well, distasteful about getting gifts for loved ones at knock-down prices. "A lot of our customers don't like it known that they buy from us," confirms Kim Nicholls, managing director of ultra-cheap mail-order firm The Book People. "That said, people do seem to be less shy than in previous years."

No prizes for guessing why. A quick look at my last few bank statements has turned me from a boy who didn't acknowledge the existence of the Special Offer Fairy into a fully paid-up believer in Christmas bargains.

First step in my Supersaver Santa initiative was to place a bulk order for 16 books by children's author Michael Morpurgo for my four nephews and nieces. Only instead of paying £95.84 in the High Street, I got the lot for £16.99 from The Book People brochure.

It was, I confess, an exhilarating sensation. And, once you've started down the discount slope, it's an unstoppable sleigh ride. Not only do you feel the financial wind in your hair, you have the sheer satisfaction of piloting your own snowplough.

The shops don't like it, of course, preferring to keep us dependent upon them for reductions. When I asked Selfridges at what point before Christmas their prices would be cheapest, they didn't want to say.

"Discounts are not something which we particularly publicise," they replied, "in the interest of driving traffic to the store right up to Christmas."

Note the word "drive", which is the same as what happens to farm animals. This Christmas, however, more and more shoppers are resolving to rise above the level of turkeys. Me included.

The fact is, once you start looking for savings, you see them everywhere. Especially in your own home. Peering into my wardrobe, I see shirts and ties that have remained unused since the day they were given to me. What could be nicer, at this time of year, than letting others experience the joy of receiving these same gifts, albeit with a little note attached, saying you've lost the receipt (more believable if you're a man, than a woman).

Bottles of drink work well, too, when it comes to re-gifting, though if you won them in a raffle, do remove the little numbered ticket beforehand; there's a bottle of Warninks Advocaat that, to my certain knowledge, has been doing the rounds of south-west London school fairs for at least the past three Christmases.

Unwanted holiday souvenirs work well, too. I know just the couple who would like the hand-stitched Croatian tablecloth we bought a couple of summers ago in Dubrovnik. And, speaking of foreign travel, you can make good use of your unused air miles at this time of year. I was delighted to discover that I could exchange my 45,000 NatWest Your Points, not for a return flight to Krakow, but for £250 worth of Marks & Spencer vouchers. Job done. Another five people who are going to be bowled over by my amazing £50-a-head generosity – and it won't cost me a penny.

Then there are all your old childhood possessions. Sorry, did I say "old"? I meant "retro". That's not just a toy car, that's a classic Dinky. And that Rupert Bear annual is a nostalgia-rich collector's item, if given to the right person (that is, someone over 50). The same goes for old football programmes: find a game played on the day of the recipient's birthday, or involving their favourite team half a century ago, and you've given a gift with genuine meaning, for no money.

Oh yes, there are big thankyous to be had for giving a present that is Thoughtful. My brother-in-law, for example, is always having to go off on business trips at short notice, so I'm giving him my own, home-made Frequent Flyer Pack. This involves two miniature tubes of toothpaste, several free hotel shampoo and conditioner sachets, plus little plastic bottles of mouthwash, eye drops and contact lens liquids, all within the 30ml hand- luggage limit imposed by airport security. Cost to me: negligible. Thoughtfulness rating: priceless, as they say in the ads.

Operating a similar, person-targeting policy, I've gone on a gift hunt to Poundland. Here, I've bought an Archers autobiography (Brian Aldridge) for an Ambridge aficionado (brother), I've sourced a set of six brightly coloured egg cups (mother-in-law), a pair of Simpsons socks (teenage son) and a Cliff Richard 2011 calendar as a supplementary gift for my mother. Cost of each item: £1.

Of course, the key to getting away with cheap presents is presentation. Immaculate gift-wrapping can elevate the most bargain-basement item up to penthouse suite level. Which means that instead of using the same clingfilm that the chestnut stuffing has been wrapped in, you invest in a roll of up-market cellophane, complete with decorative ribbon-shredding-and-curling machine. And, if possible, go to Gift School.

"The perfectly wrapped present should not need to be ripped apart, it should elegantly unravel," declares Neelam Meetcha, who runs £95-a-day gift-wrapping courses all over the country (I've gone for the free mini-video instead, on her website www.gift-wrappingservices.com).

"And remember, if you are putting together a little collection of gifts, the secret is to use a small basket that looks full, rather than a big basket that looks empty."

How right she is. Armed with her tips (Sellotape is for amateurs, use double-sided tape instead), I set about making my home-made items look shop-bought (gingerbread man, potted plant from garden, re-sealed Lord of the Rings DVD).

After a while, however, I discover that there are limits to how low I can stoop, and I don't just mean in terms of price. For while I don't hesitate to use the advice from the website www.moneysavingexpert.com, which is to put a miniature brandy bottle inside a £1 Poundland photo frame, and affix a sign saying "In Emergency Break Glass", I find myself stopping short of filling a Fortnum and Mason box with cut-price liqueur chocolates.

I also can't quite bring myself to print out my own Name A Star certificate, confirming, on behalf of the (non-existent) Interstellar Identification Commission, that a particular astral body now bears the name of my five-year-old godchild. I may be a cheapskate, but I know when I'm on thin ice.

However, when it comes to the sums of money I've saved, as part of my festive fiscal freeze, I feel no remorse whatsoever. Well, only a tiny bit, and it will be gone the minute Christmas is over. After all, as Santa will tell you, present-giving involves going down a large number of grubby chimneys, and, at the end of the day, a little bit of guilt comes off a lot more easily

than soot.

(source:telegraph.co.uk)