Bargain-hungry Americans will need to go on a post-Christmas spending binge to salvage this holiday shopping season.
Despite the huge discounts and other incentives that stores offered leading up to Christmas, U.S. holiday sales so far this year have been the weakest since 2008, when the nation was in a deep recession.
So stores now are depending on the days after Christmas to make up lost ground: The final week of December can account for about 15 percent of the month’s sales, and the day after Christmas is typically one of the biggest shopping days of the year.
Stores, which don’t typically talk about their plans for sales and other promotions during the season, are known for offering discounts of up to 70 percent after the holiday. This year, they’re hoping to lure more bargain hunters who held off on shopping because they wanted to get the best deals of the season.
A powerful winter storm, which pounded the nation’s midsection on Wednesday and is heading toward the Northeast, could hurt post-Christmas shopping.
The shopping rush after Christmas illustrates just how important holiday sales are. Consumer spending accounts for 70 percent of economic activity, and many retailers can make up to 40 percent of their annual revenue during the two-month holiday shopping period at the end of the year.
So far, holiday sales of electronics, clothing, jewelry and home goods in the two months before Christmas increased 0.7 percent compared with last year, according to the MasterCard Advisors SpendingPulse report that was released on Tuesday. SpendingPulse, which tracks spending, said that’s the weakest holiday performance since 2008 when sales dropped sharply, although the company did not know by how much.
The SpendingPulse data, which captures sales from Oct. 28 through Dec. 24 across all payment methods, is the first major snapshot of holiday retail sales. A clearer picture will emerge next week as retailers like Macy’s and Target report monthly sales.
In the run-up to Christmas, analysts blamed bad weather for putting a damper on shopping. In late October, Superstorm Sandy battered the Northeast and mid-Atlantic states, which account for 24 percent of U.S. retail sales. That coupled with the presidential election, hurt sales during the first half of November.
Shopping picked up in the second half of November, but then the threat of the country falling off a “fiscal cliff” gained strength, throwing consumers off track once again. Lawmakers have yet to reach a deal that would prevent tax increases and government spending cuts set to take effect at the beginning of 2013. If the cuts and tax hikes kick in and stay in place for months, the Congressional Budget Office says the nation could fall back into recession.
Still, the National Retail Federation, the nation’s largest retail trade group, said Wednesday that it’s sticking to its forecast for total sales for November and December to be up 4.1 percent to $586.1 billion this year. That’s more than a percentage point lower than the growth in each of the past two years, and the smallest increase since 2009 when sales were up just 0.3 percent.
Kathy Grannis, a spokeswoman for the group, noted that the trade group’s definition of holiday sales not only includes clothes and electronics, but also food and building supplies.