Last Surge Boosts Holiday Sales Past Last Year's Total

Late holiday shoppers—in the week leading up to Christmas and on the day after—provided the boost to lift 2011 holiday sales past the same period last year, according to data released Wednesday.

Consumers spent approximately $44 billion in GAFO retail sales for the week ending Dec. 24, a 37.8 percent increase over the previous week and a 14.8 percent gain over the same week last year, according to ShopperTrak, which provides traffic counting services at retail stores and malls. Foot traffic was also high, increasing 32.4 percent from the prior week.

GAFO is derived from the U.S. Commerce Department's and stands for general merchandise, apparel, furniture, sporting goods, electronics, hobby, books and other related store sales.

Last week’s sales increase ensured this December will outpace December 2010. Month-to-date figures are up 4.7 percent over December 2010, the Chicago-based firm said.

“With good weather in most of the country and the season coming to a close, procrastinators and bargain hunters hit the stores and gave retailers the sales lift they needed to outpace last year,” said ShopperTrak founder Bill Martin

According to ShopperTrak, a late holiday shopping surge is not uncommon. Last year, the 10 days before Christmas accounted for 24.4 percent of total GAFO retail sales in the entire holiday shopping season of November and December.

“Increased foot-traffic does not always translate into sales,” added Martin. “Retailers who monitored their foot-traffic hourly and adjusted inventory and staffing to convert shoppers into buyers were the most successful last week.”

As expected, shoppers came out in full force on the day after Christmas because it fell on a Monday for the first time in six years. The day ranked fourth in foot-traffic and sales for the entire holiday season, behind Black Friday November 26, Friday December 23 and Super Saturday December 17. Foot traffic increased 25.9 percent over the same day last year and consumers spent $7.1 billion on Dec. 26 in GAFO retail sales, an increase of 25.5 percent percent over the same day in the prior year.

“Dec. 26 was likely the last door-buster day of the season as shoppers returned unwanted gift items and shopped for marked-down merchandise,” said Martin. “ShopperTrak expects a drop in sales this week as the season ends. Retailers must continue to monitor same-store traffic to capitalize on the final week of the holiday season.”

ShopperTrak analyzed foot-traffic from more than 25,000 locations in the United States to create this National Retail Sales Estimate of GAFO—a nationwide benchmark of GAFO retail sales.

Weekly Holiday Internet Retail Sales Up 16%

The most recent week for holiday Internet sales, ended Dec. 25, saw a 16 percent increase in spending, year-over-year, to $2.8 billion, according to comScore, a company that measures digital data and provides digital business analytics.

The figure is an expected steep drop from the record-breaking $6.28 billion for the prior week, ended December 18, the last week where delivery of online orders could be guaranteed.

Retail e-commerce spending for the first 56 days of the November – December 2011 holiday season reached a record $35.3 billion, marking a 15-percent increase versus the corresponding days last year. This increase has been consistent throughout the holiday season.

“Holiday e-commerce spending has remained strong throughout the season,” said comScore chairman Gian Fulgoni. “We can now say with certainty that the $1.25 billion spent on Cyber Monday will rank it as the heaviest online spending day of the season for the second consecutive year, but we should also note that it was accompanied by nine other billion dollar spending days this year.”

The Reston, Va.-based company noted that over the past several years there has been a dramatic increase in Christmas Day purchases of digital content and subscriptions, a retail category that includes digital downloads of music, TV, movies, e-books and apps. As many consumers get new smartphones, tablets, e-readers and digital content gift certificates for Christmas, they spend Christmas Day loading up their devices with new content.

On an average day during the 2011 holiday season to date, digital content and subscriptions accounted for 2.8 percent of retail e-commerce sales, but on Christmas Day the category accounted for more than 20 percent of sales. Consistent with past years, comScore expects sales for this category of products to remain elevated throughout the entire week following Christmas Day.

Santa Boosts Consumer Confidence Index

The Conference Board Consumer Confidence Index, which surged nearly 15 points in November, increased another nine points in December. The Index now stands at 64.5 (1985=100), up from 55.2 in November. The Present Situation Index increased to 46.7 from 38.3. The Expectations Index rose to 76.4 from 66.4.

The CCI is now at back to levels that it last saw in April when it was at 66 points.

“Consumers’ assessment of current business and labor market conditions improved again. Looking ahead, consumers are more optimistic that business conditions, employment prospects, and their financial situations will continue to get better,” said Lynn Franco, director of The Conference Board Consumer Research Center. “While consumers are ending the year in a somewhat more upbeat mood, it is too soon to tell if this is a rebound from earlier declines or a sustainable shift in attitudes.”

Consumers’ assessment of current conditions improved in December. Those stating business conditions are "good" increased to 16.6 percent from 13.9 percent, while those stating business conditions are "bad" declined to 33.9 percent from 38 percent. Consumers' assessment of the job market was also more positive. Those claiming jobs are "plentiful" increased to 6.7 percent from 5.6 percent, while those claiming jobs are "hard to get" decreased to 41.8 percent from 43 percent.

Consumers' short-term outlook also improved in December, the Conference Board said. The proportion of consumers expecting business conditions to improve over the next six months increased to 16.7 percent from 13.7 percent, while those expecting business conditions will worsen declined to 13.4 percent from 16.1 percent.

Consumers' outlook for the job market was also more favorable. Those anticipating more jobs in the months ahead increased to 13.3 percent from 12.4 percent, while those anticipating fewer jobs declined to 20.2 percent from 23.8 percent. The proportion of consumers expecting an increase in their incomes improved to 17.1 percent from 14.1 percent.

The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by Nielsen. The cutoff date for the preliminary results was December 14.

How Americans Spend their Money

Forbes magazine and SpendingPulse, the economic research arm of MasterCard, have created a snapshot of how Americans spend their money by tracking spending patterns from 2007 until 2009, a very bad economic year.

Overall discretionary spending for 2009 totaled 1.13 trillion in 2009, slightly down from $1.16 trillion in 2008, according to SpendingPulse. Projections for 2010 show that total spending will drop again to $1.03 trillion.

The survey tracks 10 categories: air travel, auto parts and service, electronics and appliances, furniture, lodging, apparel, department stores, jewelry, luxury (excluding jewelry) and restaurants.

Spending on jewelry totaled $27.5 billion in 2009, a year-over-year decline of 7.4 percent. Jewelry accounts for 2.4 percent of annual discretionary spending. Meanwhile, overall luxury spending (excluding jewelry) in 2009 fell 9 percent year-over-year to $10.1 billion. This category accounted for 0.9 percent of total discretionary spending.

The story also looks at how citizens of 18 other countries spend their money using figures from the World Bank's most recent International Comparison Program study. This data doesn’t include jewelry and luxury spending.

August Retail Sales Flat as Consumer Spending Stalls

Retail industry sales (which exclude automobiles, gas stations, and restaurants) in August increased 0.1 percent seasonally adjusted over July and 6 percent unadjusted year-over-year, according to the monthly survey by the National Retail Federation, a retail trade association.

The NRF results are in line with data released by the U.S. Commerce Department that shows total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 0.1 percent seasonally adjusted month-to-month and 9 percent unadjusted year-over-year.

“Consumer spending in August was tempered by a continued lack of confidence in the strength of our economy,” said Matthew Shay, NRF president and CEO. “Having carried the brunt of the economic recovery so far, consumers may be waiting for good news in terms of employment and market stability, cautiously spending on things they need and thinking twice about things they want.”

Specific sales results from the NRF survey include:

* Sales at electronic and appliance stores increased 0.5 percent seasonally adjusted month-to-month and 2.5 percent unadjusted from last year. Sporting goods, hobby, book and music stores’ sales increased 2.4 percent seasonally adjusted over July and 9.3 percent unadjusted year-over-year.

* Health and personal care stores sales increased 0.2 percent seasonally adjusted over July and 5.4 percent unadjusted year-over-year.

* Building material and garden equipment and supplies stores sales increased 0.2 percent seasonally adjusted over the previous month and 9 percent unadjusted year-over-year.

Consumer Confidence ‘Deteriorates’ in August

De Beers Beverly Hills store. Photo credit: Anthony DeMarco

The Conference Board Consumer Confidence Index, which improved slightly in July, plummeted in August. The Index now stands at 44.5 (1985=100), down from 59.2 in July. It is the lowest reading since April 2009. The Present Situation Index decreased to 33.3 from 35.7. The Expectations Index decreased to 51.9 from 74.9 last month.

“Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook,” said Lynn Franco, The Conference Board Consumer Research Center director. “A contributing factor may have been the debt ceiling discussions since the decline in confidence was well underway before the S&P downgrade. Consumers’ assessment of current conditions, on the other hand, posted only a modest decline as employment conditions continue to suppress confidence.”

Consumers’ appraisal of present-day conditions weakened further in August. Consumers claiming business conditions are “bad” increased to 40.6 percent from 38.7 percent, while those claiming business conditions are “good” inched up to 13.7 percent from 13.5 percent. Consumers' assessment of employment conditions was more pessimistic than last month. Those claiming jobs are "hard to get" increased to 49.1 percent from 44.8 percent, while those stating jobs are “plentiful” declined to 4.7 percent from 5.1 percent.

Consumers' short-term outlook deteriorated sharply in August. Those expecting business conditions to improve over the next six months decreased to 11.8 percent from 17.9 percent, while those expecting business conditions to worsen surged to 24.6 percent from 16.1 percent. Consumers were also more pessimistic about the outlook for the job market. Those anticipating more jobs in the months ahead decreased to 11.4 percent from 16.9 percent, while those expecting fewer jobs increased to 31.5 percent from 22.2 percent. The proportion of consumers anticipating an increase in their incomes declined to 14.3 percent from 15.9 percent.

Slight Gain in Consumer Conference Index for July

Kim Kardashian shopping in Beverly Hills. Photo credit: FlynetPictures.com

The Conference Board Consumer Confidence Index, which had declined in June, improved slightly in July. The Index now stands at 59.5 (1985=100), up from 57.6 in June. The Present Situation Index decreased to 35.7 from 36.6. The Expectations Index rose to 75.4 from 71.6 last month.

“Consumer confidence posted a modest gain in July, the result of an improvement in consumers’ short-term outlook,” said Lynn Franco, The Conference Board Consumer Research Center director. “Consumers’ appraisal of current business and employment conditions, however, was less favorable as concerns about the labor market continue to weigh on consumers’ attitudes. Overall, consumers remain apprehensive about the future, but some of the concern expressed last month has abated.”

Consumers' assessment of current day conditions weakened further in July. Those stating business conditions are “good” decreased to 13.4 percent from 13.7 percent, while those claiming business conditions are “bad” increased to 39 percent from 38.4 percent, according to the monthly report. Consumers’ appraisal of the job market was also less favorable. Those claiming jobs are “hard to get” increased to 44.1 percent from 43.2 percent, while those stating jobs are “plentiful” remained unchanged at 5.1 percent.

Consumers’ short-term outlook improved moderately in July. The proportion of consumers expecting business conditions to improve over the next six months increased to 17.7 percent from 16.5 percent. However, those anticipating business conditions will worsen also increased, to 15.2 percent from 14.9 percent.

Consumers were also mixed about the outlook for the labor market over the next six months. Those anticipating more jobs in the months ahead increased to 16.7 percent from 13.8 percent. However, those expecting fewer jobs also increased to 21.8 percent from 20.7 percent. The proportion of consumers anticipating an increase in their incomes rose to 15.7 percent from 14.1 percent.

The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by The Nielsen Company. The cutoff date for July’s preliminary results was July 14.

NRF: Retail Sales Up 0.3% in June

Retail industry sales (which exclude automobiles, gas stations, and restaurants) in June increased 0.3 percent seasonally adjusted from May and 5.5 percent unadjusted year-over-year, according to data from the National Retail Federation, which notes that it’s the 12th conservative month of retail sales growth.

The organization said warm weather, lower gas costs and strong Father’s Day promotions put consumers in a spending mood in June.

“A solid year of growth in sales provides further evidence that retailers continue to lead the charge in the economic recovery,” said Matthew Shay, NRF president and CEO. “While spending continues to surpass expectations, sustained growth in the retail sector depends on a strong labor market.”

“Retailers are hoping this momentum continues through the back to school season,” added Jack Kleinhenz, NRF chief economist. “Knowing that shoppers remain concerned about the economy, companies have already begun offering aggressive promotions to entice shoppers.”

June retail sales released by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 0.1 percent seasonally adjusted month-to-month and 8.4 percent unadjusted year-over-year.

Specific sales results from NRF include:

• Clothing and clothing accessories stores’ sales increased 0.7 percent seasonally adjusted over May and a 7.6 percent unadjusted year-over-year. Sales at building material and garden equipment stores increased 1.3 percent seasonally adjusted month-to-month and 8.5 percent unadjusted over last year.

• Sales at electronic and appliance stores decreased 0.2 percent seasonally adjusted month-to-month and fell 2.3 percent unadjusted from last year. Home furnishings stores sales decreased 0.8 percent seasonally adjusted over May and increased 0.2 percent unadjusted year-over-year.

• Health and personal care stores sales decreased 0.2 percent seasonally adjusted over May but increased 3.9 percent unadjusted year-over-year.

Affluent Households Will Increase Luxury Spending by 3%

Jim Taylor

PALM BEACH, Florida — Overall spending on luxury goods and services will rise by 3 percent in 2012 among those the top 10 percent of American households, led by the top 1 percent who will spend 4 to 5 percent more than the prior year, according to a recently released survey. This includes a slight increase in the sales of luxury jewelry and timepieces.

“It’s a very healthy increase and will likely be sustained well into the next year,” Jim Taylor of the Harrison Group said Monday at the American Express Publishing Luxury Summit, held at The Breakers.

For the sixth year, Taylor gave his entertaining talk on the state of the top 10 percent of U.S. households based on income in the Survey of Affluence and Wealth in America report. According to the survey, there are approximately 12 million households in 2012 with at least $100,000 in discretionary income that make up the top 10 percent. The study of 1,268 affluent and wealthy consumers tracks the attitudes, lifestyles, luxury category spending patterns and financial services participation in this demographic. Among its findings:

* The total discretionary luxury consumption market for 2012 will be approximately $375 billion and nearly two thirds of all luxury spending will be consumed the top 12 million families.

* The wealthiest consumers in the U.S. are sitting on approximately $6 trillion in savings that could balloon to $12 trillion by 2014, Taylor said during a sunrise meeting with journalists Tuesday. If the holders of these savings start spending, it could bring about “A capital boon in America the likes of which we’ve never seen.” On average, families in the study save 23 percent of their income, which increases to 34 percent among the one percent.

* The most likely investment for all of this money is real estate beginning in 2014 as it is one of the few places where there are still deals available. “A real estate boom is around the corner because there is nowhere else to put the money,” Taylor told the luxury summit attendees Monday.

* What’s stopping the wealthy from moving their savings is their pessimism about the economy. Among those surveyed, 78 percent believe the U.S. is in a recession and 52 percent believe that it will last for a least another year. “What’s driving these people nuts is the pronouncement that everything is okay,” he said.

* A secondary reason why the wealthiest Americans are saving is because they feel their success is under siege from the Occupy Wall Street movement and the political debate over the fairness of the increasing gap between the wealthy and the middle class. About 20 percent of consumers with discretionary incomes at $250,000 and about 25 percent of the one percent are worried about being disparaged for being financially successful. “It is clear that American entrepreneurs and successful people are nervous about the break out of an extraordinary kind of antagonistic class warfare as the election season unfolds,” Taylor said.

* Surprisingly, 75 percent of those surveyed favor a significant tax increase on income but not on their assets, Taylor said.

* Philanthropic spending is closer to home and family than it has been in the past: church, school, healthcare. “There’s a growing abandonment of environmental causes and social causes,” Taylor said. “We are seeing an inclination not to share.”

This complex picture of wealthy households affects how these households view luxury goods and services.

For example, the study is documenting a shift away from value-driven spending with more than 30 percent of respondents skeptical of the value of consumption itself. The survey has defined this as “The Worth Movement.”

“These families can be heard to say about a trip, a dress, an automobile, a piece of jewelry, or even an investment, ‘I know I spent more than I had to but it was worth it,” said Cara David, Senior VP at American Express Publishing, which co-produced the report.

Fundamental worth oriented shoppers (about 19 percent of respondents) are characterized by the following:

* A preference for stores that are elegant (78 percent);
* A desire for the experience of purchasing to be as pleasant as the experience of owning (83%);
* A greater likelihood of having close relationships with a select group of salespersons (36 percent); and
* A belief that it is worth paying more for the very best quality automobiles (76 percent), hotels (73 percent) and jewelry (63 percent).

“What people want is a company that shares their value system and this value system is expressed in the transaction, design and advertising and to the extent that it remains consistent is fluid over time,” Taylor said. “What we’re advocating is you got to find out what your brand means to you.… It’s not enough just to be different.”

NRF: March Retail Sales Up Nearly 4%

Retail sales in March increased across the board for the ninth straight month, according to the National Retail Federation. Sales for March (which exclude automobiles, gas stations, and restaurants) increased 0.6 percent seasonally adjusted from February and 3.9 percent unadjusted year-over-year.

“Shoppers last month were eager to take advantage of retailers’ spring promotions on everything from apparel to outdoor furniture,” said Matthew Shay, president and CEO of the world's largest retail trade association. “While current indicators point to a more confident consumer, increasing gas prices and a cramped job market could hamper consumer spending during the upcoming summer months, a key time of year for retailers.”

March retail sales released Wednesday by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 0.4 percent seasonally adjusted over February and 7.3 percent unadjusted year-over-year. 

Warmer weather helped building material, garden equipment and supplies dealers see increased sales last month, increasing 2.2 percent seasonally adjusted from the previous month and 5.5 percent unadjusted over last year, according to NRF figures. Clothing and clothing accessory stores sales rose 0.6 percent seasonally adjusted month-to-month and 3.4 percent unadjusted year-over-year. 

Electronics and appliance stores also saw solid gains with March sales up 2.1 percent seasonally adjusted from the previous month and 3.6 percent unadjusted over last year in those stores. Sales at grocery stores increased 0.3 percent seasonally adjusted month-to-month and 4.1 percent unadjusted year-over-year. Health and personal care stores sales increased 0.7 percent seasonally adjusted over February and 5.1 percent unadjusted over last year. 

Also benefiting from warmer weather, furniture and home furnishing stores sales increased 3.6 percent seasonally adjusted month-to-month and 3.8 percent unadjusted year-over-year.  

Holiday Retail Sales Up 5.7%

Retail industry sales (which exclude automobiles, gas stations, and restaurants) for December rose 5.3 percent unadjusted year-over-year and 0.5 percent seasonally adjusted from November, according to the National Retail Federation.

As a result, preliminary sales for the November and December 2010 holiday season rose 5.7 percent to $462 billion, surpassing NRF's forecast of 3.3 percent. This represents the best holiday sales gain since 2004 when holiday sales increased 5.9 percent.

“In spite of weakness in employment and rising gas prices, consumers showed they still have spending power which helped retailers when it counted most,” said Matthew Shay, NRF president and CEO. “Retailers did a tremendous job planning for the season by managing inventory and hitting the right price points that helped them tap into pent up demand.”

Meanwhile the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 0.6 percent seasonally adjusted over November and 8.3 percent unadjusted year-over-year. 

Sales growth from November varied in strength while year-over-year sales showed great strength, NRF said. Sales at clothing and clothing accessory stores decreased 0.2 percent seasonally adjusted over last month but increased a solid 8.4 percent unadjusted year-over-year. Sporting goods, hobby, book and music stores sales increased 0.4 percent seasonally adjusted month-to-month and 8.2 percent unadjusted year-over-year. 

Though the US is still dealing with a weak housing environment, building material and garden equipment stores sales increased 1.9 seasonally adjusted over last month and year-over-year growth of 12 percent.

Electronics and appliance stores sales decreased 0.6 percent seasonally adjusted over November but increased 1.4 percent unadjusted year-over-year. Sales at health and personal care stores 1.6 percent seasonally adjusted month-to-month and 7.2 percent unadjusted over December 2009.

Fewer People Spent More on Luxury Jewelry

Luxury jewelry spending increased 3 percent, year-over-year, in the third quarter of 2010, according to American Express Business Insights. The average transaction size for luxury jewelry purchases increased 6 percent while transaction volume for the category fell by 3 percent.

These are much lower numbers than what was reported by the Spend Sights Report—Luxury Retail survey for the prior two quarters. For example, spending on luxury jewelry increased by 18 percent in March and 17 percent in April, while increases for the last four consecutive months was below 6 percent—including no increase at all in September.

Males were responsible for 71 percent of consumer luxury jewelry purchases and consumers over 46 years of age were responsible 54 percent of total jewelry spending—according to the report, which tracks furniture and home furnishings, apparel and accessories, jewelry and department stores.

Shoppers under the age of 35 made up 25 percent of total luxury jewelry customers in the third quarter, slightly higher than the year prior at 21 percent.

Overall, the luxury retail sector continued to show improvement as consumer confidence slowly restores, the report states.

According to the report, furniture and home furnishings posted the most significant year-over-year gains of the third quarter with a 13 percent increase, with department stores were not far behind at 10 percent. Overall spending for apparel and accessories for the period rose by 5 percent.

Individual consumer spending was up across all luxury retail sectors and showed an increase of 12 percent in furniture & home furnishings. Small and large businesses, however, continued to hold back and decreased spending in this category by 2 percent and 7 percent, respectively.

Holiday Jewelry Sales Up 8.4%, Luxury Sales Up 6.7%, Total Holiday Sales Up 5.5%

After a mild start, jewelry posted several weekly sales increases and ended the 2010 holiday shopping season with a year-over-year increase 8.4 percent, according to MasterCard Advisors’ SpendingPulse. Meanwhile, luxury sales (excluding jewelry) started the season with a solid gain and then picked up steam, ending with a very respectable year-over-year growth of 6.7 percent.

During the 50-day period (from November 5 till December 24), the data showed overall year-over-year growth of 5.5 percent, excluding auto sales.

“If last year’s holiday story was about gaining some stability, this year’s is about getting back to growth,” said Michael McNamara, vice president, Research and Analysis for SpendingPulse. “The 2010 holiday period is categorized by strong year-over-year growth in apparel and continued strength in e-commerce. We also saw a noticeable return in spending in the larger ticket items, as exemplified by the solid growth in jewelry, luxury and even the furniture category.”

McNamara said the momentum in 2010 holiday season spending appears to have started as early as the second week of November, producing a month of solid growth and persisting through the traditional early December lull.

“The cold weather across much of the country in December appeared to be a positive for the apparel sector,” McNamara said. “While there was some disruptive weather in the Midwest and the west coast toward the end of the season, the conditions did not seem to negatively impact the national sales momentum. In some cases the weather may have also benefited the e-commerce channel.”

As with last year’s holiday season, e-commerce was the big winner this year, with seasonal sales up 15.4 percent. With online sales representing significant share of sector sales in areas such as apparel, the double-digit growth rates are becoming more meaningful.

Apparel sales for the season saw a year-over-year increase of 11.2 percent, according to SpendingPulse, with menswear posting a 10.5 percent year-over-year increase and women’s apparel up 5.6 percent, making for one of the best periods of growth in this subcategory since the financial market turmoil in 2008, according to SpendingPulse. For the 2009 holiday season, apparel sales were down by 0.4 percent.

Meanwhile, it was electronics sales that lagged this holiday season with a year-over-year sales increase of 1.2 percent, due primarily to the decline in TV prices.

A macroeconomic indicator, SpendingPulse reports on national retail and services sales and is based on aggregate sales activity in the MasterCard payments network, coupled with survey-based estimates for all other payment forms, including cash and check. SpendingPulse is provided by MasterCard Advisors, the professional services arm of MasterCard Worldwide.