Holidays and retail sales

Holidays and retail sales

November 18th, 2012 in Opinion Times

The last few weeks of the year are critical for retailers. It's especially true in 2012, when the economy is emerging - albeit slowly - from a long funk. Such growth in sales at traditional brick-and-mortar and online retailers suggests that holiday sales will be stronger this year than in the past several. Still, concerns about unemployment and residual consumer nervousness give jittery merchants reason for concern.

Given such contradictory signs, it is understandable that the nation's merchants are closely watching their books as Christmas and other holiday shopping begins in earnest.

The worry about the bottom line is understandable.

Many businesses in the retail trade earn a large portion of their yearly profit during the final months of the year. It's not unusual, analysts report, for some to earn up to a third of their annual income during the period. Given that, anything that can affect sales - local worries about jobs, news about blips in the nation's economy, harsh weather, etc. - is reason enough for business owners to brood. Initial holiday sales predictions, though, should help ease such concerns this year.

Recently, the National Retail Federation forecast that 2012 holiday sales will increase 4.1 percent. That is higher, an agency spokesman says, than the 10-year-average holiday sales increase of 3.5 percent. He added that it was NRF's most optimistic forecast since the recession. Surely, those numbers are reason for optimism among merchants.

Initial reports from retailers' front lines seem to support the more sanguine forecasts. Many traditional and online merchants already are reporting steady traffic and consistent sales during the days before the traditional Thanksgiving kickoff to the holiday sales season.

The number of early shoppers, according to a survey conducted by BIGinsight, is up slightly this year. About 53 percent of Americans already have done some holiday shopping, up from 51.4 percent last year. The items of interest are remarkably consistent with previous year's purchases.

Almost 60 percent have fashion and apparel items atop their lists. About the same number will purchase gift cards, increasingly the most requested gift item by family and friends. The other top sellers this year, if predictions are correct, will be, of course, toys, electronics and books, CDs, DVDs, video and video games.

That pattern is in keeping with another authoritative report from analysts. ShopperTrak, the world's largest counter and analyzer of retail foot traffic, has forecast more than a 3 percent increase in foot traffic this year.

There is still another reason for optimism this year, as well.

There are 32 days between Black Friday (the day after Thanksgiving) and Christmas in 2012. That's the most shopping days possible. Moreover, since Christmas and New Year's are in mid-week, there are more weekend shopping days than usual on the calendar. That delights retailers. Weekends, of course, typically are the busiest days for holiday sales.

Whatever the early signs might be and whatever the quirks of the calendar might provide, merchants aren't taking anything for granted.

They have an ambitious slate of in-store and online sales and promotions scheduled throughout the season. Some even will open for business on Thanksgiving night - though not all consumers are happy with that - rather than wait until the wee hours of Friday morning. Many other merchants have significantly extended store hours through Christmas Eve. Understandably, retailers don't want a customer to arrive at their store ready to buy and find it closed.

Even strong early sales and a prediction of improved holiday sales aren't enough to fully assuage merchants' worries. They know from past experience that as many as 15 percent of shoppers wait until the last week or so before hitting the stores. The worry, of course, is that something will happen to keep the procrastinators at home.

This year, profits of retailers are tied more than usual to the continued improvement in the U.S. economy. Retail sales are an important component of the overall economic health of the nation, and the willingness of consumers to spend at higher levels this holiday season is key to the continued improvement of the nation's fiscal health. Shoppers seem up to the challenge.

Consumers, encouraged by slow but consistent gains in important economic indictors and improvements in the job market, seem poised to spend more this year than last. For the moment, that remains more speculation than fact.

The real answer to questions about how robust 2012 holiday retail sales will be can be determined only with the passage of time. That's how long it will take to determine if positive prognostications and early reports of increased consumer spending prove true.