Drop in Holiday Spending Spells More Trouble for Retailers in ‘09

December 29th, 2008 | by alexis |

Described by industry analysts as one of the worst holiday season sales periods on record, December’s retail sales figures plummeted 4% from last year’s numbers. Retailers are finally coming to grips with the fact that the American public has gone into a full-on savings mode that wasn’t the norm in recent years.

Original forecasts had widely predicted just a 1% drop in sales, though some analysts had actually predicted a 2.2% increase.  It appears to have been wishful thinking on their part and a lack of understanding just how seriously consumers have been affected by the economic downturn.

Electronic and luxury goods were hit the hardest by America’s recession-charged spending habits. Below is a quick shot of the overall totals:
· Sales of electronic items and appliances were down 26%
· Luxury goods, which saw a 7.5% increase in purchases last year, dropped 21.2%.
· That number jumps to 34.5% when jewelry sales are factored in.
· E-Commerce, an area that many analysts had predicted would help salvage a bleak spending season, was down 2.3% between December 1 and Christmas Eve.

Retail stores across the country are now faced with the difficult task of enticing buyers to spend in the last few days of the 4th Quarter, and retailers plan on implementing some very creative tactics. The most uniform decision among retailers was to move up clearance sales, typically held in January, to this past weekend in hopes that post-holiday shoppers will take advantage of the low prices. Neiman Marcus has announced they will offer 40% off already reduced merchandise, and Circuit City, which has been operating under Chapter 11 bankruptcy-court protection since November 10, has been advertising Blu-Ray discs for as little as $12.99 this week.

In addition, J.C. Penny is offering complimentary wake-up calls to shoppers looking to wake up at 5:30am, and the department store plans to offer 100 “doorbuster” deals, up from 50 last year, in addition to cutting 70% off the price of gold and sterling-silver jewelry.

The odds of a turnaround are not in retail stores’ favor. Consulting firm Deloitte LLP points out that the distribution of gift cards, generally a great source of indirect income for retailers since consumers usually spend more than the amount of their gift cards, saw a 24% drop from last year.

Related Blogs

  1. 3 Responses to “Drop in Holiday Spending Spells More Trouble for Retailers in ‘09”

  2. By Anthony on Dec 31, 2008 | Reply

    Who are the “experts” who thought retailers would see a 2.2% increase this year? Which news program have they been watching?

  1. 2 Trackback(s)

  2. Dec 29, 2008: A Recap of Some Holiday Book Sales News | Bookshop Blog
  3. Jan 14, 2009: Tax Returns Get User-Friendly This Year

Post a Comment