Lets watch the MSM spin this good news. Their lead will probably be "Jewelers disconsolate over lower sales."
Retail Spending Rose
8.7% in Holiday '05,
MasterCard Finds
By STEPHANIE KANG
Staff Reporter of THE WALL STREET JOURNAL
December 27, 2005; Page A13
After a few slumping weeks in early December, consumers came back to stores in the last days before Christmas to deliver a solid, if not spectacular, holiday season, according to one early projection.
Holiday spending climbed 8.7% ahead of last year, according to SpendingPulse, a retail-sales data service from MasterCard International's MasterCard Advisors unit. Demand for flat-panel television sets, MP3 players and digital cameras helped spur gains, as did sales of home furnishings. But sales of jewelry fell this season following years of solid gains.
"Overall, we got off to a very strong start, then that evolved into a solid finish," says Michael McNamara, vice president of research and analysis for MasterCard Advisors. But he cautioned, "It didn't blow the barn doors off."
[Laptops Hot, Baubles Not]
The SpendingPulse data covers the period from Friday, Nov. 25, through Saturday, Dec. 24, a 30-day shopping season this year compared with only 29 days in 2004. The projection is based on data and analysis that includes purchases made via credit and debit cards, cash and checks. It includes sales at stores and on the Internet, sales of gift cards and sales of food in stores and restaurants. It doesn't include auto or gasoline sales.
The strongest category gains came in home furnishings, including linens and picture frames, with sales up 15%, according to the SpendingPulse data. Sales of consumer electronics grew 11%, fueled in part by prices for flat-screen TVs and digital cameras that were lower than last year. Sales of sporting goods, books, music and video advanced 6.4%, while apparel rose 5.8%, despite the lack of must-have items this year. Women's apparel did a little better, with an 8.2% gain. Furniture sales rose 5.3%. Sales of jewelry slid 4.6%, perhaps as shoppers funneled their big-ticket spending into electronics.
Online spending continued to explode this year, as retailers offered Web-only discounts and shipped gifts later than ever. Holiday retail sales on the Internet are expected to top predictions of $19.6 billion in sales this year, a figure that is 24% ahead of the $15.8 billion consumers spent online last holiday season, according to comScore Networks Inc., a Reston, Va., market-research firm.
The National Retail Federation, an industry group, had predicted a 6% rise in overall holiday spending, well behind the SpendingPulse projection. Several factors explain the discrepancy: The SpendingPulse data reflects both online sales and sales of gift cards; the NRF counts only a portion of online sales, and it doesn't count sales of gift cards until they are redeemed. MasterCard adjusts the SpendingPulse data to eliminate effects of new-card usage and the general shift in spending to credit from cash.
MasterCard's SpendingPulse data attempts to mirror the retail data collected each month by the Commerce Department. Data for the month of December from both MasterCard and the Commerce Department is expected to be released later in January.
Last year, MasterCard projected a 8.1% gain in holiday retail sales, and in January 2005, the Commerce Department reported an 8.7% increase in December sales. The NRF forecast a 4.5% gain in 2004 holiday sales and in January 2005 reported a 5.7% rise.
Holiday spending got off to an early start this year, as big discounters tempted Thanksgiving weekend shoppers with deep discounts on flat-panel televisions, laptop computers, MP3 players and digital cameras. Wal-Mart Stores Inc. launched its holiday ad campaign on Nov. 1, two weeks earlier than usual and beefed up its offerings of discounted computers and electronics. On Christmas Eve, Wal-Mart said that, taking last week's receipts into account, it would stand behind its forecast of a 2%-to-4% gain for December same-store sales.
"Consumers used a lot of their money early on and spent it on big-ticket items," says Marshal Cohen, chief analyst at Port Washington, New York market research firm NPD Group.
Peter Morici, professor of business at the University of Maryland, said he has been expecting holiday retail sales gains of more than 6%, as consumers feel the burden of credit card spending and start seeing their first winter heating bills. "Holiday sales were constrained because people were plain out of money," he said.
The weeks after Black Friday, the industry's nickname for the day after Thanksgiving, seemed especially slow this year. And then, in the final week, a three-day transit strike in New York last week cost stores and other city businesses $1 billion, according to the New York City mayor's office. Mr. McNamara said that during the strike that ended Dec. 22, retail sales in New York State dropped 5% compared with the same period in 2004.
Throughout the season, consumers proved willing to fork over for big markdowns on laptop computers, cashmere and other high-end goods. According to SpendingPulse data, purchases above $1,000 grew 13% and purchases between $500 to $999 rose 12%. Meanwhile, sales below $100 rose 5.9%.
Still, gas prices seem to have played a smaller role than experts initially feared, as prices dropped more than 30% from their highs in September, when prices rose above $3 a gallon in many parts of the country.
And tapped out or not, many shoppers returned to stores late last week sniffing out last-minute deals. Ally Lodholz, 32 years old, of Eagan, Minn., says she was surprised at the number of steep discounts she found this year -- more than last year, she says. She was delighted when a $100 office chair she had in mind for her husband went on sale for $60 at Office Max soon after Thanksgiving. "Everywhere I went there were more sales -- 50% to 60% off at almost every store," she says. "I came to expect to buy everything on a big discount -- 10% off doesn't even feel like a sale anymore."
This week, retailers will look for bargain-hunters and shoppers spending gift cards to give December receipts a last-minute boost.
At KB Toys Inc., Ernie Speranza, the company's chief marketing officer, said the company's gift card business outpaced previous years. He declined to give numbers but predicted, "January will be a terrific January for retail sales." Many retailers plan to stock fresh merchandise in January to tempt post-Christmas shoppers redeeming gift cards.
Suzanne Gilbert, a Chicago financial consultant, was in Marshall Field's bright and early yesterday, hunting for deals on women's clothes. Retailers' holiday promotions actually got her more for her money than she expected, she says. She estimates she spent $3,000 this year on finds such as dress shirts for her son at 30% off and iPod speakers on sale for 30% off. "The discounting is just phenomenal," she said. "I ended up getting a lot more for the money."
By region, sales in the Southeast, including North Carolina, South Carolina, Florida and Georgia, grew 11%, according to SpendingPulse, while Pacific states like California, Oregon and Washington, experienced a 9.6% increase. The smallest gain, 5.3%, belonged to the Great Plains area including Kansas, Missouri, Minnesota and North Dakota. Sales in the Northeast grew just 6.9%; 8.1% in the mid-Atlantic and 8.4% in North Central states including Ohio, Michigan, Wisconsin and Illinois. |
