Retail Traffic Plunges By "Staggering" 21% In Week Before Christmas
That it has been one of the most lacklustre shopping seasons in recent years has already been repeatedly covered, with average holiday spending expected to decline for the first time since the Great Financial Crisis of 2008, all this despite record promotions and an ever earlier start to Black Friday.
Another chart showing the same trend from Bloomberg, with the comment that the "eroding middle class can no longer drive activity as it has in the past" - that's odd: we said the same thing in late 2009 for which we got yet another label of tinfoil conspiracy theorists...
However, while the early start to shopping season has missed expectations, driven primarily by an unprecedented weakness in traditional bricks and mortar outlets, there was some hope that the last stretch into Christmas and the New Year would provide a much needed, last minute bump. Those hopes were dashed last night when Shopptertrack reported that retail traffic plummeted by an unprecedented 21% last week, and in-store sales decreased 3.1% from the year before, dashing retailers' hopes that the final stretch before Christmas would offset soft sales numbers earlier in the holiday shopping season.
The disappointing numbers, released by ShopperTrak on Monday, are "kind of staggering," said the research firm's founder, Bill Martin, who last week voiced optimism that retailers would see a noticeable spike in traffic and sales the week of Dec. 16-22 after two consecutive weeks of decreases in both.
He attributed the latest nosedive to successful November promotions, and bad weather last week in the Midwest and other central states. An increase in virtual window-shopping has prevented consumers throughout the shopping season from setting foot in many stores to look, feel and compare prices, he added.
Wait, November promotions were successful? For whom: retailers whose bottom lines got crushed in the margin collapse, or buyers who decided to wait and keep waiting for even better deals, until in the end they decided not to buy at all. Blaming the weather we understand, as do the trend to convert purchases to "window shopping" - in a world in which everything is turning virtual, it only makes sense that Americans pretend to shop asl well.
What's worse, however, is that the deus ex of online sales is not appearing and will not save the day:
But even online sales aren’t growing at the expected pace. Online spending from home and work desktop computers in the U.S. from Nov. 1 through Dec. 15 was up 9 percent from the same period last year to $37.8 billion, according to the most available data from comScore.
That’s below the 14 percent growth that the Internet research firm is forecasting for the season.
Even though Black Friday holds the title as single busiest shopping day of the holiday season, the week before Christmas is traditionally the busiest week in the most important shopping season of the year. Many retailers depend on November and December to make as much as 40 percent of their annual revenue, the National Retail Federation says. But while 2013 is shaping up to be the largest holiday shopping season on record, retailers are not getting the photo finish they expected.
"The numbers are not devastating, but they are a bit alarming," Martin said.
He is not revising his forecast of 2.4 percent overall growth in retail sales for November and December, already the slowest growth since 2009, because it was strong sales in early November that caused the softer late-season sales.
Finally, it appears that the strategy of pulling forward demand to the present through record discounts, and crushing margins in hopes of "making it up in volume" only works for those perpeptual non-cash flow generating juggernauts like Amazon, which on a long enough timeline will do everything (badly), and supposedly put everyone out of business. Just not yet.
Retailers began earlier than ever promoting deep discounts and deals to appeal to frugal consumers. Retail sales in November were up 4.7 percent from 2012, the Commerce Department reported.
"November was pretty strong, and that's going to carry some weight into December," Martin said. "If December ends up being flat, I expect we're still going to have a 2.4 percent increase."
There are some strong shopping days left before the end of the month, he said, and retailers will push hard to get shoppers back into their stores post-Christmas to exchange gifts, use gift cards and take advantage of post-holiday promotions. Gift cards are not recorded as sales until they are exchanged for merchandise, and because 80 percent of shoppers plan to buy them this year, bringing total gift card spending to an all-time high of $29.8 billion, they could have a big influence on sales after the Christmas holiday.
Final sales figures for the holiday shopping season are expected in January.
We can't wait. In the meantime, we expect seasonally adjusted government retail sales data to indicate once again, that all is well, and that it is not the ARIMA X 12 seasonal fudge-factor goalseeker that is wrong, but that it is reality which is at fault.
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