VOL. 124 | NO. 237 | Thursday, December 3, 2009
Electronics Soar; Clothing, Luxury Stumble in Nov.
ANNE D'INNOCENZIO | AP Retail Writer
NEW YORK (AP) - Electronics sellers and online merchants thrived in November, particularly on Black Friday, but clothing and luxury merchants struggled, according to estimates released Wednesday.
Those results, combined with a trimmed sales prediction for retailers' official November results, raise worries that some sectors could face tough going in the critical countdown to Christmas as they grapple with frugal Americans contending with job insecurity and tight credit.
"Last year, it was uncertainty that was driving the cautiousness," said Mary Delk, director of Deloitte Consulting. This year, it's "anxiety about their (own) personal finances" that's making shoppers more frugal.
Fat discounts drove shoppers to stores and online this past weekend, and Delk thinks it's likely they won't come back until the season's final hours when the bargains are even better.
The International Council of Shopping Centers trimmed its November sales growth forecast on Tuesday, citing more shoppers who are saying they're putting off holiday shopping compared with a year ago.
Marshal Cohen, chief industry analyst at market research firm NPD Group, says that what's comforting is that shoppers, who had slashed their spending all year, bought plenty of items for themselves this past weekend. That means there's plenty of gift buying to go, he said.
Analysts are carefully studying how consumers behave during the holidays and beyond to get a sense of how strongly the economy will rebound from the worst recession since the 1930s. That's because spending on goods and services for consumers accounts for about 70 percent of U.S. economic activity by federal measures. The holiday season accounts for as much as 40 percent of annual sales and profits for many retailers.
There are some encouraging signs that shoppers are just a bit more open to discretionary purchases. The battered jewelry sector rose 4.6 percent in November, according to MasterCard Advisors' SpendingPulse sales figures released Wednesday.
Overall, according to SpendingPulse, which estimates sales in all payment forms including cash and checks, November sales proved to be "a mixed bag," said Kamalesh Rao, director of Economic Research.
Both apparel and luxury excluding jewelry weakened in November after showing signs of life in the fall. Sales for mall-based apparel chains fell 5.7 percent, on top of an 11.3 percent decrease last year. Rao noted that the apparel chains showed improvement over the holiday weekend, as shoppers scooped up discounted items, resulting in flat sales on Black Friday compared with a year ago.
But department stores suffered an 8.6 percent drop in November, on top of a 6.3 percent decline last year. On Black Friday, sales for this sector fell 4 percent.
Electronics sales, helped by new video game releases, rose 6.6 percent. What further helped boost the monthly figure was a robust 8 percent sales gain on Black Friday, according to SpendingPulse. Meanwhile, the data service offered more evidence that online sales are roaring back. Online sales soared 12.3 percent in November compared with November 2008, when sales increased 8.3 percent. No figures were available for Black Friday performance.
Luxury sales, excluding jewelry, fell 7.3 percent for November compared with an 11.3 percent drop a year ago. Rao suspects that milder weather might have helped dampen apparel sales.
The figures come ahead of reports set for Thursday by major retailers on November sales.
Michael P. Niemira, chief economist for ICSC, now predicts that November sales at stores open at least a year – a key industry barometer – will be up 3 percent to 4 percent. That's lower than his original forecast of 5 percent to 8 percent growth. But the figures are being compared with a steep 7.7 percent drop a year ago.
The holiday weekend's receipts are not a predictor for the holiday season because it accounts for only about 10 percent of overall holiday sales, according ShopperTrak, a research firm.
Last year, Black Friday sales were strong, but fell off dramatically for the rest of the weekend. Shoppers cut back even more as the season went on, pushing overall sales for November and December down 6.3 percent, according to SpendingPulse.
But analysts will study the mindset of shoppers like Nancy Muller of San Francisco's Noe Valley neighborhood, who had no intention of going shopping on Black Friday until she and her son Joshua heard on TV at 6 a.m. that there were no lines at the local Best Buy. So they bought a discounted 40-inch Dynex flat-screen TV and accessories to go with it.
Nancy Muller said they would probably end up spending less or about the same this year.
"I'm happy to be employed," she said. "I just want to keep things in perspective."
AP Retail Writer Vinnee Tong in San Francisco contributed to this report.
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