Late Spending Binge Boosts Retail Sales

AP ^ | 12-29-03 | ANNE D'INNOCENZIO

[Indy Pendance]

NEW YORK (AP) -- A late spending surge helped boost sales last week for many merchants, according to data released Monday, offering relief to retailers in a holiday season that is still projected to be only modestly better than a year ago.

Internet sales and consumer electronics were the winners, both rising strongly from a year ago, but sales at department stores and toy stores fell.

Unlike a year ago, when last-minute spending was insufficient to help retailers meet their holiday goals, this year's finale was strong enough to offset December's earlier weakness, according to Michael P. Niemira, chief economist and director of research at the International Council of Shopping Centers.

"I'm much more upbeat than I was a week ago," said Niemira, who also serves as a consultant at ShopperTrak, which will release on Tuesday data showing sales through this past Saturday. "The surge was late. but it was enough to save the season."

"The worry level was high, but sales came through - but not evenly," Niemira said. He added that the day after Christmas, which starts the post-holiday sales, was much stronger than a year ago.

Niemira believes that overall same-store sales growth is on track to meet his forecast of 4 percent for the November-December period, reduced earlier in the season from 4.5 percent. That's on top of a meager 0.5 percent gain during holiday 2002 from the previous year.

Same-store sales growth, or sales at stores opened at least a year, are considered the best indicator of a retailer's health.

While modest - given that stores hoped to benefit more from a recovering economy - the expected gain will still be the biggest since 1999, when Niemira's tally posted a 5.4 percent increase.

The nation's retailers are slated to report final December same-store sales figures on Jan. 8.

On Monday, MasterCard Advisors, a unit of MasterCard International, said that total sales were up 6.5 percent from Nov. 28 through Dec. 24, compared with a year ago. The figures were adjusted to reflect the extra day this holiday season.

Internet and catalog sales rose 6.5 percent, MasterCard Advisors said, while consumer electronics and appliance store sales were up 6.7 percent. Sales at home furnishing stores increased 3.9 percent. But apparel stores were up only 1.65 percent, department store sales fell 1.4 percent and sales at toy stores declined 7.7 percent.

Phil Kowalczyk, managing director of the retail consulting group Kurt Salmon Associates, said he is still sticking to his forecast for total holiday sales, excluding restaurants, to be up 3.5 percent.

"This holiday season was solid, and it was better than last year, but it wasn't the euphoria people were expecting," he said. "Not everybody got gifts from Santa."

He estimated that stores likely sold anywhere from 4 percent to 5 percent more items than a year ago, but lower prices than last year on goods like DVD players and more planned promotions dampened overall sales revenue.

One major plus for the season is that profits are expected to be healthy because of lean inventories and the lack of across-the-board discounting that characterized last year's season, Kowalczyk said. Even as the season got more challenging, stores went ahead with another round of planned discounts, but they "weren't panic promotions," he said.

Online sales have been the big pleaser.

From Nov. 1 through Dec. 26, online sales reached $11.7 billion, an increase of 29 percent compared to a year ago, according to comScore Networks Inc. That's tracking at the high end of holiday projections. The Internet research company projects online retail spending to total between $12.1 billion and $12.6 billion, excluding travel and auctions, in November and December.

While it was no surprise that stocking stuffers and virtual presents like gift certificates did well, comScore also reported an unexpected late rise in furniture and appliance sales.

That showed an "increased use of buying online and picking up at the store," said Dan Hess, a vice president of comScore.

[waterstraat]

How many people gave, or received, items NOT from
China?

[LS]

Even this is somewhat misleading, because one of the hottest items this year was gift cards, and the actual $ amounts of these are not calculated until they are spent, not when they are sold. So if, say, the retailers sold $1m in gift cards, they only count those when the cards are redeemed. That boosts sales even further.