Green Room

The 2013 Christmas shopping season – Huge discounts, slow brick-and-mortar traffic and net sales

posted at 5:50 pm on January 8, 2014 by

Reuters has the first post-mortems of the 2013 Christmas shopping season, and the news is not good from the brick-and-mortar segment:

U.S. retailers posted their lowest holiday sales growth in four years after shoppers stayed at home despite some of the biggest discounts and promotions since the recession, retail industry tracker ShopperTrak said.

Retail sales between Thanksgiving and Christmas rose 2.7 percent, compared with 3.0 percent a year earlier, while the number of people walking into stores across the United States declined 14.6 percent, ShopperTrak said.

“Not only were people more promotional this year, giving away more margin, but it didn’t generate the incremental traffic they would have expected,” said Cowen & Co analyst John Kernan.

ShopperTrak does not count online sales, which were at record levels early in the shopping season. While the National Retail Federation thinks the online component will raise its measure of holiday sales increase to 3.9% when it issues its report on Tuesday, my pessimism from last month seems to be buttressed by the rest of the Reuters story:

In a sign of how tough the season was, J.C. Penney Co Inc said on Wednesday it was “pleased” with its holiday season sales without giving specific results, prompting many on Wall Street to say the department store chain’s sales may have declined last month….

Online spending also fell below estimates. According to data firm comScore (SCOR.O), U.S. online retail spending rose 10 percent to $46.5 billion in the November-December 2013 holiday season, below the 14 percent growth it had forecast.

Assuming the National Retail Federation uses essentially the same numbers as ShopperTrak and comScore, I would expect total Christmas season sales to increase by only 3.7%.

Meanwhile, the subject of private-sector inventories and its effect on 4th-quarter GDP came up during the ADP conference call with Moody’s Analytics chief economist Mark Zandi (via BizzyBlog). If you recall, 1.67 percentage points of the 3rd-quarter 4.1% real GDP growth was a result of increased inventories, with growth of non-farm inventories accounting for 1.55 percentage points of that. Zandi is expecting only a slight drop in the contribution of increased inventories to the 4th-quarter GDP. That’s another sign that following 4 years of “Recovery Summer”, there hasn’t really been a recovery at all.

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Anecdotally, I never it saw it so dead at the places I visited, in fact there were more gang bangers at the MOA than shoppers. Then again it’s usually like that, so whatever.

Bishop on January 8, 2014 at 5:55 PM

The malls and the discount stores were so crowded this Christmas season, nobody went to them.

Apologies to Yogi Barra.

simkeith on January 8, 2014 at 5:55 PM

I definitely cut down on my spending this year.

rbj on January 8, 2014 at 6:26 PM

That’s another sign that following 4 years of “Recovery Summer”, there hasn’t really been a recovery at all.

…no shit?…no shit!

KOOLAID2 on January 8, 2014 at 7:35 PM

…pivot!

KOOLAID2 on January 8, 2014 at 7:43 PM

Macy’s just announced 2500 people getting laid off. That should tell you all you need to know.

gophergirl on January 8, 2014 at 9:34 PM

Black Friday in the store at which I work was somewhat less busy than last year.

A Balrog of Morgoth on January 8, 2014 at 9:59 PM

Why buy anything? It only promotes and supports evil Christianity. /

Seriously, is this an effect of years of religion bashing and banning from schools and the public square?

FOWG1 on January 8, 2014 at 10:09 PM

As I was in MN for Thanksgiving, my 15 y/o daughter wanted to experience the MOA on Black Friday….. Not something I was looking forward to!
However, other than the typical waiting for a parking spot in the garage for about 20 minutes, the Mall was surprisingly quiet! Granted, we didn’t get there until about 11 AM, but had no trouble in any of the stores or restaurants. All in all, just another day there…..

Markvike on January 9, 2014 at 8:38 AM

As I was in MN for Thanksgiving, my 15 y/o daughter wanted to experience the MOA on Black Friday….. Not something I was looking forward to!

Markvike on January 9, 2014 at 8:38 AM

I miss that chinese restaurant with the large order of cheese curds, man oh man. Anyway…

My family went to Bass Pro. Other than that, it was internets all the way. Can’t wait until the internet tax starts. Got to make things fair!

LaughterJones on January 9, 2014 at 8:43 AM

Macy’s just announced 2500 people getting laid off. That should tell you all you need to know.

gophergirl on January 8, 2014 at 9:34 PM

I haven’t set foot in a Macy’s in a while. Last time I was there was a couple years ago during tax-free weekend to get some new jeans. A lot of brick and mortar stores I went to from late November through December weren’t very busy. Even Black Friday(or technically Black Thursday night) was much less crowded compared to previous years. The busiest day by far that I saw was the day after Christmas. Which means there was a ton of reverse shopping going on which is not what retailers want to see.

Doughboy on January 9, 2014 at 8:54 AM

My family went to Bass Pro. Other than that, it was internets all the way. Can’t wait until the internet tax starts. Got to make things fair!

LaughterJones on January 9, 2014 at 8:43 AM

And by “fair”, the bipartisan Party-In-Government means “equally sucky”.

Steve Eggleston on January 9, 2014 at 9:28 AM

I did NO shopping, we stayed home and “enjoyed” each others company….Won’t someone PLEASE, impeach the SCOMAT.

Offhanded on January 9, 2014 at 10:25 AM

Cut down significantly on my shopping, refused to go to the mall. I’m beyond tired of getting treated as if I’m bothering the employees at the mall by being there and supporting their businesses.

smfic on January 9, 2014 at 3:57 PM

When I tried to point out the rising inventories previously were more evidence of businesses hoping than actual growth, the leftists (suddenly economics experts, oddly enough) informed me they wouldn’t build up inventories unless they expected a busy season.

Retailers, of course, can’t afford to play on their expectations. They have to prepare for any eventuality, and the risk of being stuck with some excess inventory was less harmful than being caught without if the season boomed.

But when you do get stuck with excess inventory, you sell it down, which means orders in the next quarter or two will suffer. The “growth” was front-loaded, and may not actually occur at all.

Financial markets reflect current loose money policies more than the economy at large. A far better gauge is private capital investment, which remains at a five year low. That is what drives economic growth, it matter less where the wealth comes from that it is indeed invested, and it isn’t being invested.

Adjoran on January 9, 2014 at 11:57 PM