Holiday Retail Sales Nudge Higher

Increase Far Below Pre-Holiday Forecasts

Holiday Retail Sales Nudge HigherRetail sales between October 28 and December 24 rose 0.7%, a modest year-over-year gain that could lead to sharp post Christmas discounting as stores look to clear inventory. The increase, which was recorded by the MasterCard Advisors Spending Pulse, was far below the pre-holiday forecasts of analysts, who expected at least a 4% jump in sales as a result of improving consumer confidence. By comparison, in 2011, retail sales increased 2% during the holiday shopping season.

Experts are blaming several factors for the poor retail showing, including Superstorm Sandy, which reduced sales in the northeast U.S. through early November. It appeared, though, that retailers had recovered during the weekend after Thanksgiving when Black Friday sales soared, especially for big box stores like Wal-Mart. However, analysts believe renewed concerns about rising taxes in 2013 made consumers apprehensive throughout December.

The only area of strong growth was online sales, which even on Christmas Day increased 22.4% over last year, according to the IBM Digital Analytics Benchmark. Retailers – many of which have fiscal quarters that end in January – now seem focused on late 2012 and early 2013 sales, hoping this coming weekend especially will provide a revenue boost. Already, Barnes & Noble has begun offering 50% discounts through e-mail promotions, while Macy’s and Bloomingdale’s are promoting discounts of up to 75% for some items.