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Christmas sales no longer key economic indicator
By Kathleen Dayton
Staff Writer
The garland is down, the twinkling lights are packed away and retailers have made it through another holiday season.
As they settle into 2007, some are still waiting for holiday sales results, but most of the retail industry already has a good idea of how the past holiday season will wrap up.
“I would say November started out very strong,” said Susan McWaters, district manager of Belk. “December started out strong and kind of ebbed off. We never had a true crescendo; it was very steady.”
One of the trends McWaters noticed was more after-Christmas shopping, with people spending gift cards.
“The week after Christmas was way beyond our expectations and that’s been a trend for a couple of years,” McWaters said.
Shopping season spreads out
Holiday sales were once considered the barometer of the economy, but that is becoming less true each year as the shopping season spreads out. Also, online sales are not included in most industry reports and gift cards aren’t logged as sales until they are redeemed.
Rebecca Gosnell, marketing director for Mount Pleasant’s Towne Centre, said Christmas sales are not as critical as they once were for retailers, although the season is still important.
“Cultures change, shopping patterns change,” Gosnell said. “There was a time when you heard people referring to Christmas as being 50 percent of their annual business. That is not the case any more. You can’t survive any more if you’re expecting Christmas to be half your business.”
People’s shopping patterns have changed, with more steady shopping traffic throughout the year as opposed to intense shopping at certain times of the year.
“It used to be there were certain times when you went to town to buy clothes. You had Easter, you had back-to-school and you had Christmas,” she said. “While those are still peak periods, there is now this more steady, rounded shopping experience. That’s not to undermine the importance of December. If you have a bad December, it can kill your business; it’s such a time to score a major part of your sales. But I think a lot of people still have that misconception that they make half their money in December.”
Leslie Riley, marketing director of Northwoods Mall, said even the day after Thanksgiving is not what it used to be.
“You have a mass of people, but it gets smaller and smaller each year,” Riley said. “There are gift cards and people wait until after Christmas because of the sales.”
Leigh Burnet, marketing director of Citadel Mall, expects holiday sales to end up slightly higher than last year, when mall sales increased 4% from 2005.
“It was very last minute this year, and we’ll probably end slightly up,” Burnet said. “Like any holiday season, some weeks were up and some weeks were down.”
2006 season: moderate
Patrice Duker, spokeswoman for the International Council of Shopping Centers, called the 2006 holiday season moderate.
“It certainly was not a gangbusters season,” Duker said. “The weather wreaked havoc on apparel stores in November and December, and that was across the country.
December’s weather was the warmest in five years, causing apparel chain store sales to decline by 0.9%.
In Mount Pleasant, Belk was selling flip-flops and swimsuits, McWaters said.
“Because of sporadic weather spikes in Charleston, one week was great for cold-weather merchandise (and) the next week was 80 degrees,” she said.
ICSC reported a 3.1% gain in December for chain stores open at least a year. The National Retail Federation’s broader survey, which includes new stores, publicly traded companies and privately owned companies, reported a 4.4% gain in retail sales for the two-month holiday season. The organization had predicted a 5% increase.
“Unseasonably warmer winter weather and the slower housing market had a clear impact on consumer spending,” said NRF Chief Economist Rosalind Wells. “NRF expects these subdued gains to continue into the first half of 2007.”
More decorations needed
Consumer trends analyst Britt Beemer, president and CEO of Charleston-based America’s Research Group, thinks retailers need to get into the holiday spirit a little more next year if they want to entice more shoppers.
To do that, he said they simply need to bring on the decorations.
“This year, if you had walked through any of the malls in America and if you took all the decorations out of the malls and just looked at the decorations in the stores, it was the most pitifully decorated retail season in my life,” Beemer said.
A survey Beemer’s company did the week before Christmas revealed that 38.3% of consumers said retail stores aren’t decorated as much as they used to be. Last year, the same survey turned up 24.2% of consumers with decoration deprivation. Two years ago only 12.2% of consumer felt they were deprived of holiday decor.
“The lack of decorations is having a dampening effect on retail and I think it’s because we’ve got bean counters running all these companies today and because all the companies are publicly held,” said Beemer. “Everything is earnings-driven and Wall Street-driven and not Main Street-driven. When I talk to people on the promotions side, they all say their Christmas budget keeps getting sliced each year. Many told me they didn’t have enough money to replace what broke last year.”
It isn’t enough that people were able to say “Merry Christmas” again last December instead of sticking to religion-neutral greetings such as “Happy Holidays” or “Seasons Greetings,” Beemer said.
“That doesn’t fix the problem. I think all (retailers) look at is how much money did I save this year, versus how much business could I have done if I had had the ‘wow’ factor.”
Looking ahead to 2007, Beemer doesn’t see greatly inflated retail sales on the horizon.
“I really see 2007 being a repeat of 2006 unless there’s some new product out there, or unless the (Federal Reserve Board) lowers the interest rate and there’s a housing spurt,” he said. “Otherwise, I see it as quiet.”
Kathleen Dayton is a staff writer for the Business Journal. E-mail her at kdayton@charlestonbusiness.com.
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