Sunday, November 28, 2010

Are Businesses Bouncing Back With Start To Holiday Shopping Season?

That's the multibillion dollar question. Are retailers seeing increases in consumer spending as the shopping season when most retailers see the bulk of their revenues?

So far, retailers have seen the barest of increases in sales in brick and mortar stores and shopping malls, while online retailers have done better (that includes those stores that have both online and brick and mortar presence). They saw a 0.3% increase in sales over last year, which suggests that consumer confidence still hasn't recovered.
The heavy discounting and lower prices on certain types of items, particularly LCD TVs, held down overall spending. On Friday, retailers at shopping malls eked out a 0.3 percent increase to $10.69 billion, according to preliminary figures from ShopperTrak, a research firm that tracks sales at 70,000 stores.

TV prices are falling almost twice as fast as they did earlier this year amid a glut. They're selling for anywhere from 15 to 20 percent lower than Christmas 2009.

Earlier buying in November also stole some sales away from the day, said ShopperTrak co-founder Bill Martin. But 2.2 percent more customers came into stores on Black Friday compared with the same day last year. The research firm tracks sales at stores in shopping malls, not big discounters like Wal-Mart and Target, which draw much Black Friday spending.

The National Retail Federation trade group estimated on Sunday that 212 million shoppers visited stores and websites over Black Friday weekend, up from 195 million last year, according to a survey it conducts.

A fuller picture on spending will come Thursday when retailers report November revenue figures.

Online, spending rose more than 14 percent from Thanksgiving Day through Saturday, according to IBM's Coremetrics. The average order rose 14 percent and the number of items per order grew 15 percent, fueled by shoppers taking advantage of deals on Black Friday.

My own experience with Black Friday shopping in Bergen County seems to track that. I found that car traffic on the Route 17 and Route 4 corridors to be much lower than a normal Saturday, which means that consumers were elsewhere. Parking for the Garden State Plaza was crazy and traffic did back up on to the Garden State Parkway for the exit that led into Garden State Plaza, but Route 4 and 17 were unaffected by the kind of congestion that usually occurs during the holiday season.

Paramus Park's parking lots weren't nearly as busy at 8am when I arrived there, but the mall was busy and people were definitely buying items. Clothing retailers like Ann Taylor were holding 40% sales, but those sales extended through the weekend. Sears wasn't as busy as I expected, considering that they had some great deals on appliances and televisions.

That is a double edged sword - as businesses gave deep discounts to drive traffic to their stores, but retailers aren't going to make as much if they're discounting - and if people are expecting deep discounts, they are going to come to expect it more regularly and that will hold prices down.

Once again, I did about half my shopping online, and the other half was done at the various malls and local stores. Shopping may have been skewed this year to some extent because the Jewish holiday of Hanukkah has come much earlier than many years - it begins the evening of December 1.

Also, some businesses started their deep discounting sales earlier this year than in prior years. Some started giving Black Friday type deals at least a week ago, if not more, and others were conducting online deep discount sales on Thanksgiving day. gave rotating deep discounts all week long, and will continue doing so tomorrow on Cyber Monday. That will certainly skew sales as well.

We'll have a much better picture in coming weeks.

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