Retail sales declined 5.3 percent Dec. 19-21 because of inclement weather and a slowing U.S. economy, Chicago-based research firm ShopperTrak RCT Corp. said yesterday in a statement.
U.S. consumers were working with smaller budgets for holiday gifts this year because of rising unemployment and declining home values. Macy’s Inc. and Saks Inc. offered discounts of as much as 70 percent to lure shoppers seeking bargains, and retailers’ profit margins may suffer as a result.
“We had that deep drop-off in consumer spending, which propelled the retailers to go into these very competitive pricing wars,” said Marshal Cohen, chief industry analyst with Port Washington, New York-based NPD Group Inc.
“It has a lot to do with the fact that you can get almost anything, anywhere, at any price.” Customers have come to expect discounts, he said yesterday in an interview with Bloomberg Television.
Traffic decreased 6.5 percent for the week through Dec. 20 from a year earlier, ShopperTrak said. The pre-Christmas weekend drop was the biggest since at least 2003. The company uses a sampling of more than 50,000 stores in shopping centers and malls to measure foot traffic, or count the number of customers that enter the locations.
ShopperTrak said Dec. 23 that U.S. customer traffic on Dec. 20, also known as “Super Saturday,” fell 17 percent from the corresponding day a year earlier, Dec. 22, 2007. Foot traffic was hurt by the economy, unfavorable weather and a calendar shift, the research firm said. Sales for the day rose 0.5 percent.
The Standard & Poor’s 500 Retailing Index has shed 34 percent this year, with only two of its 27 companies gaining. Macy’s Inc., the second-largest U.S. department store company, has plunged 66 percent.
Consumer spending, which accounts for two-thirds of the U.S. economy, dropped at a 3.8 percent annual pace in the third quarter, the biggest plunge since 1980, according to the Commerce Department.
Customers have five fewer shopping days between Thanksgiving and Christmas this season. There may have been a slight boost in sales and traffic this week as people who waited until the last minute crammed their shopping into the days leading up to the holiday, ShopperTrak co-founder Bill Martin said.
Last week was the snowiest seven days before Christmas in more than a decade, according to Scott Bernhardt, operating chief of Planalytics Inc., a Wayne, Pennsylvania-based weather consulting firm.
Sales at stores open at least a year may drop as much as 2 percent in November and December, more than the previously projected 1 percent decline, the International Council of Shopping Centers said yesterday. That would make it the worst Christmas sales season in at least 40 years, when the group started tracking data.