Monday, December 29, 2008
Wall Street Journal - Price-slashing failed to rescue a bleak holiday season for beleaguered retailers, as sales plunged across most categories on shrinking consumer spending, according to new data. Despite a flurry of last-minute shoppers lured by the deep discounts, total retail sales, excluding automobiles, fell over the year-earlier period by 6% in November and 8% in December through Christmas Eve, according to MasterCard Inc.'s Spending Pulse unit.
When gasoline sales are excluded, the fall in overall retail sales is more modest: a 3% drop in November and a 4% decline in December. A 40% drop in gasoline prices over the year-earlier period contributed to the sharp decline in total sales. [Retail sales chart]
But considering individual sectors, "This will go down as the one of the worst holiday sales seasons on record," said Mary Delk, a director in the retail practice at consulting firm Deloitte LLP. "Retailers went from 'Ho-ho' to 'Uh-oh' to 'Oh-no.'"
The holiday retail-sales decline was much worse than the already-dire picture painted by industry forecasts, which had predicted sales ranging from a 1% drop to a more optimistic increase of 2%.
Luxury goods, once considered immune from economic turmoil, were hardest hit, with sales falling 21%, compared with a jump of 8% a year ago, when the economy had just begun to sputter. Including jewelry sales, the luxury sector plunged by a whopping 35%.
During the same period last year, overall retail sales rose a modest 2%, helped by late-season discounting that enticed procrastinating shoppers. But this year, after a moderate uptick in shopping activity boosted by steep promotions the Friday after Thanksgiving, shoppers closed their wallets and reopened them only cautiously, worried by job losses, a sinking stock market and a recession climbing into its second year.