The National Retail Federation and Visa attributed the overall strength of the numbers to low unemployment, growing wages and confidence among consumers. “The economy was clearly stronger in the fall,” says NRF Chief Economist Jack Kleinhenz. “Economic indicators were up, retailers offered great deals, confidence improved and all of that empowered consumers to spend more.”
The National Retail Federation is forecasting holiday sales for the November and December period to rise 3.6% to $655.8 billion, much better than the 3% growth seen in the year-ago period. The figure also is much higher than the 10-year average of 2.5% and above the 3.4% growth seen since the recovery began in 2009.
Sales, both in stores and online, from Thanksgiving through the weekend were estimated to have dropped 11%, to $50.9 billion, from $57.4 billion last year, according to preliminary survey results released Sunday by the National Retail Federation. Sales fell despite many stores’ opening earlier than ever on Thanksgiving Day.
As flailing Washington, D.C., insiders race to reopen the government and avoid default (along with the economic doomsday many predict might follow), retailers have a more immediate worry: Will consumers spend less on the coming holidays?
Major retailers including Costco, Gap and Nordstrom on Thursday reported better-than-expected revenue in December. Twenty retailers reported that revenue at stores open at least a year— an indicator of a store’s health — rose an average of 4.5% in December compared with the same month a year ago, according to the International Council of Shopping Centers. That’s on the high end of the expected range of 4%-4.5%.
All told, a record 247 million shoppers visited stores and websites over the four-day weekend starting on Thanksgiving, up 9.2% of last year, according to a survey of 4,000 shoppers that was conducted by research firm BIGinsight for the National Retail Federation.
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Eighteen retailers ranging from discounter Target to department-store chain Macy’s reported August sales on Thursday that rose 6% – the industry’s best performance since March, according to trade group International Council of Shopping Centers.
For all of 2011, sales totaled a record $4.7 trillion. That was a gain of nearly 8% over 2010 — the largest percentage increase since 1999. December’s increase, though, was the weakest in seven months. Excluding volatile auto purchases, overall sales actually fell 0.2%. It was the first such drop since May 2010.
When retailers post their December sales this week, Wall Street analysts expect them to report a healthy end to the holiday season, helped by discounts, improved consumer sentiment and tactics like extended hours and layaways.
The start of the holiday shopping season in November helped produce the sixth straight monthly increase in retail sales. Overall, most analysts expect the economy to grow at an annual rate of at least 3% in the October-December quarter, up from 2% in the July-September period.
A record 226 million shoppers visited stores and websites during the four-day holiday weekend starting on Thanksgiving Day, up from 212 million last year. Americans spent more, too: The average holiday shopper spent $398.62 over the weekend, up from $365.34 a year ago.
The International Council of Shopping Centers says that revenue rose 5.5% in September, with several retailers including Target, Limited Brands and Kohl’s posting strong gains as consumers snagged discounted merchandise.
Retailers and manufacturers are figuring out how to appeal to the new ‘forever frugal’ consumers — rather than pin too much hope on economic rebound. Some are waiting longer to pass on higher costs. Others have added new packages at small sizes and lower price tags. Some retailers are holding the line on hiring, even as they head into their busiest season of the year. Many stores are expanding their selection of cheaper private-label products and some are offering credit cards with across-the-board discounts. Layaway has made a comeback.
National retail sales, when compared to the same period last year, will rise 3% during November and December, while foot traffic will decrease 2.2%.
Despite a flow of bad economic news that kept consumer confidence shaky, a number of retailers reported July revenue on Thursday that beat Wall Street estimates, including discounter Target, department store Macy’s, and luxury chain Saks. The International Council of Shopping Centers’ preliminary tally of retailers’ revenue at stores open at least a year — a key indicator of a merchant’s health — was up 4.6%, a slower pace than June’s 6.9% gain but in line with forecasts.
Retail revenue rose 5.5% last weekend, a drastic improvement from the same weekend last year, when revenue dropped 6.2% because a big East Coast snowstorm closed malls and kept shoppers at home.
While retailers reported a strong Thanksgiving weekend, they are unsure how much people will spend before Christmas in an economy that’s still bumpy.