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Holiday Shopping 2012 A Bust


holiday-shoppingInitial U.S. retail sales figures released on Wednesday showed sales growth for the holiday season was the worst since 2008.

According to MasterCard SpendingPulse, holiday sales posted a paltry 0.7% increase against expectations of a 3-4% gain. That’s below the same period last year when sales grew at a 2% pace.

Analysts looking for a convenient excuse have been quick to blame Hurricane Sandy. But in reality, there’s something else much bigger at work here. The fact that retailers and politicians can’t get their heads around these obvious trends is alarming.

1) People simply have less money in their pockets and economic uncertainty is keeping it there.

The undeniable casualty in this entire mess is consumer confidence. Never mind the “recovery” or the fiscal cliff, the data clearly shows the average American is girding for four more years of economic insecurity.

For example, current consumer confidence figures reflect lows we haven’t seen since last June so it’s only natural that consumer spending falls as well.

2) Numb consumers are shifting to non-traditional sales outlets in an attempt to make each dollar they do spend go farther; this is skewing the data.

The trend in “dollar stores” is undeniable. Sites like Etsy, which bills itself as the world’s most vibrant hand-made craft place, are booming.

Remember when gift buying was fun – not a chore? Finding great little nuggets at the dollar store or a gift that reflects the recipients personality on Etsy is enjoyable. Like shopping is supposed to be.

3) Retailers are in large part to blame.

By stretching the holiday shopping season forward with displays that effectively bookend the holiday buying season and extend well beyond the two months that are traditionally measured, they are ensuring a holiday spending “slump,” for lack of a better term, because the spending is less concentrated.

4) Online retailing is slowly clobbering bricks-and-mortar.

Online holiday sales rose 15.2% year over year.

Sales were especially crisp in the last few days before Christmas. Behind the sharp rise in online sales close to Christmas was retailers offering later cutoff dates for guaranteed Christmas Eve delivery, including several offering free shipping with a Dec. 24 guaranteed delivery date. Christmas also fell on a Tuesday, which led more retailers to offer delivery by Dec. 24 than a year ago, when Christmas fell on a Sunday and many guaranteed delivery by Dec. 22 or 23.

Based on these four factors I expect to be writing the exact same post in 12 months as holiday 2013 will feature many of the same results.

One Comment leave one →
  1. brandon dcholz permalink
    12/28/2012 8:20 am

    Consumers are holding on to their shekels for the ride over the cliff.

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