VOL. 125 | NO. 215 | Thursday, November 4, 2010
Americans Likely Took Retail Breather in October
ANNE D'INNOCENZIO | AP Retail Writer
NEW YORK (AP) – After a last-minute back-to-school buying spree, Americans appeared to have taken a shopping pause in October, resulting in a mixed retail sales picture.
That lull could continue until the day after Thanksgiving, the unofficial start of the Christmas season, as shoppers wait for big bargains, many analysts say.
Figures released Wednesday by MasterCard Advisors' SpendingPulse, a data service, showed that pockets of strength last month – luxury goods as well as women's and children's clothing – held up. Online sales also remained a bright spot.
But consumer electronics, dragged down by deep discounting on flat-panel televisions, suffered spending declines compared with October 2009. Men's clothing sales were lackluster. Consumers also pulled back again on major appliances amid the absence of home tax incentives.
More detail will be available Thursday when individual chains release their October sales results.
"This was an OK month. It wasn't that bad," said Mike McNamara, vice president of research and analysis for SpendingPulse, which includes transactions in all forms including cash.
McNamara noted he had been concerned about October's sales because retailers don't want to see a buildup of inventory heading into the season. But with the exception of super-sized TVs, which have been victims of an industrywide glut, he says that retailers weren't stuck with a lot of merchandise they had to get rid of to make room for holiday stock.
However, many other analysts trimmed their October forecasts. The International Council of Shopping Centers pared its forecast for a key measure called revenue at stores open at least a year. ICSC now expects growth to be anywhere from 2 percent to 2.5 percent, despite a boost from Halloween spending. That's slightly down from an earlier prediction for 2.5 percent to 3 percent growth.
Luxury stores such as Saks and Nordstrom are expected to reap strong gains because the stock market is rebounding, while discounters should fare well. Analysts believe department stores got hurt last month because unusually warm weather hurt sales of cold-weather items. Analysts will be closely monitoring last month's performance at discounter Target Corp., which unveiled its much-publicized 5 percent discount to store credit and debit card holders. The offer started Oct. 17.
Wal-Mart Stores Inc., the world's largest retailer, no longer reports revenue at stores open at least a year on a monthly basis.
"Retailers may see some pent-up demand" as temperatures cool, but Ken Perkins, president of research firm RetailMetrics. added, "Retailers are going to have to be promotional. Most consumers are waiting. Unless (the bargains are) really enticing like 70 percent, consumers are going to hold off. It's going to be another late holiday season."
The uneven fall selling period reflects how shoppers are increasingly spending only when they have a good reason to come out to the mall – whether it's for back-to-school or if they're out of something, such as milk.
"The consumer environment remains choppy with increased promotional levels," UBS analyst Roxanne Meyer wrote in a report issued Monday.
Economists expect holiday sales to be only modestly better than last year as shoppers remain cautious about spending. Unemployment is still stuck close to 10 percent, and consumers' confidence is still well below what's considered healthy. That's why more retailers are making an even bigger push to market Christmas starting in October.
Sears Holdings Corp. and Amazon.com are already offering discounts they're pitching as "Black Friday" deals. Though retailers would like people to shop earlier, Black Friday, the day after Thanksgiving, is considered the holiday shopping kickoff. It got its name because it was historically the day that merchants sold enough merchandise to push them into profitability or "the black" for the year.
However, despite a similar early holiday marketing push last year, consumers didn't do much buying until they came out for the big sales on the day after Thanksgiving, Perkins says.
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