Deck the Malls With Boughs of Holly
With global economic weakness finally knocking consumer confidence in America, US retailers are struggling to lure in Christmas shoppers, says David Teather.
New Yorkers awoke on Wednesday morning to find several inches of snow had fallen overnight. The tree has been lit in Rockefeller Plaza, and Christmas suddenly feels around the corner in New York, a city that always wears the holiday season well.
But the city's retailers are hoping that the festive feel will put its 8 million residents in the mood for shopping. US retailers are braced for a tough holiday.
Rising unemployment, the third successive year of slumping stock markets, slowing real wage growth, fears of terrorism and war in the Middle East seem to be finally sapping consumer confidence.
In the shopping malls of America the early signs are that business is not good. Consumer spending accounts for two-thirds of US economic activity and not only the retailers will be watching carefully.
US retail sales figures for November, published this week, were disappointing almost across the board, despite a shopping frenzy over the Thanksgiving weekend. More than one third of shoppers said they intend to spend less this holiday season than they did last year, according to a Deloitte & Touche survey of 13,000 Americans.
Federated Department Stores, which owns the twin giants of New York retailing, Macy's and Bloomingdales, reported a drop in same store sales over the month of 7.4%, twice as bad as it had predicted. Federated is hoping for flat sales in December at best.
Target, a popular discount retailer, reported a 6.7% drop in same store sales, JC Penny showed flat department store sales and Sears Roebuck said sales fell by 10.9% last month. Sears sees a decline in the mid-single digits during December. They were 13% lower at Abercrombie.
"The holiday sales season so far has been a bust for most retailers," said Kurt Barnard, president of Barnard's Retail Consulting group, which forecasts consumer shopping trends.
Auto sales in November were also 13% lower than last year's record figures, although they were better than October, which recorded the lowest annualised sales rate in four years.
The lacklustre start to the Christmas shopping season could have another explanation. Retailers are hoping that the November figures have simply been skewed by the late Thanksgiving holiday, which falls on the fourth Thursday of the month.
Americans do the large part of their Christmas shopping after Thanksgiving, which this year fell on November 28, against last year, when it fell on November 22. In that case, December could make up for an otherwise dismal November.
But one fact militating against that interpretation is the still improving sales at Wal-Mart over the period. The granddaddy of the discount retailers recorded an increase of 2.6%, suggesting that shoppers are shifting down a gear to less expensive gifts. On the Friday after Thanksgiving, the discount superstore notched up a one day sales record of $1.43bn, 14% higher than the previous year.
The irony is that confidence is wavering just as signs of a recovery - albeit a patchy one - are gathering. New jobless claims are at a 21-month low, suggesting that redundancies may have peaked, and Wall Street has enjoyed an eight-week rally that has only faltered in recent days.
Even corporate technology spend has started to trend upwards - Intel, the bellwether computer chip-maker, on the same day raised its sales forecasts for the fourth quarter as demand begins to pick up.
The benefits of continuing mortgage refinancing to take advantage of historically low interest rates should also be feeding through to consumers' bank accounts.
The other notable exception in America's shopping malls has been the Gap, the clothing retailer, which finally appears to have rediscovered its form. After 29 straight months of same store decline, the Gap has now improved sales for two months in succession.
The Gap said sales in November were 9% better, the result of a back-to-basics policy. The company admitted it had lost its way by becoming too fashion conscious and is again putting out the kind of basic clothing that made it successful. In the same month in 2001, revenues had declined by 25% on the previous year.
The clear winner is the consumer. Many retailers, the Gap included, have resorted to marking prices lower already in the hope of luring shoppers in - with the likely result of hurting margins even if sales can be given a fillip.
For those who want to shop, there are bargains to be had.
But the city's retailers are hoping that the festive feel will put its 8 million residents in the mood for shopping. US retailers are braced for a tough holiday.
Rising unemployment, the third successive year of slumping stock markets, slowing real wage growth, fears of terrorism and war in the Middle East seem to be finally sapping consumer confidence.
In the shopping malls of America the early signs are that business is not good. Consumer spending accounts for two-thirds of US economic activity and not only the retailers will be watching carefully.
US retail sales figures for November, published this week, were disappointing almost across the board, despite a shopping frenzy over the Thanksgiving weekend. More than one third of shoppers said they intend to spend less this holiday season than they did last year, according to a Deloitte & Touche survey of 13,000 Americans.
Federated Department Stores, which owns the twin giants of New York retailing, Macy's and Bloomingdales, reported a drop in same store sales over the month of 7.4%, twice as bad as it had predicted. Federated is hoping for flat sales in December at best.
Target, a popular discount retailer, reported a 6.7% drop in same store sales, JC Penny showed flat department store sales and Sears Roebuck said sales fell by 10.9% last month. Sears sees a decline in the mid-single digits during December. They were 13% lower at Abercrombie.
"The holiday sales season so far has been a bust for most retailers," said Kurt Barnard, president of Barnard's Retail Consulting group, which forecasts consumer shopping trends.
Auto sales in November were also 13% lower than last year's record figures, although they were better than October, which recorded the lowest annualised sales rate in four years.
The lacklustre start to the Christmas shopping season could have another explanation. Retailers are hoping that the November figures have simply been skewed by the late Thanksgiving holiday, which falls on the fourth Thursday of the month.
Americans do the large part of their Christmas shopping after Thanksgiving, which this year fell on November 28, against last year, when it fell on November 22. In that case, December could make up for an otherwise dismal November.
But one fact militating against that interpretation is the still improving sales at Wal-Mart over the period. The granddaddy of the discount retailers recorded an increase of 2.6%, suggesting that shoppers are shifting down a gear to less expensive gifts. On the Friday after Thanksgiving, the discount superstore notched up a one day sales record of $1.43bn, 14% higher than the previous year.
The irony is that confidence is wavering just as signs of a recovery - albeit a patchy one - are gathering. New jobless claims are at a 21-month low, suggesting that redundancies may have peaked, and Wall Street has enjoyed an eight-week rally that has only faltered in recent days.
Even corporate technology spend has started to trend upwards - Intel, the bellwether computer chip-maker, on the same day raised its sales forecasts for the fourth quarter as demand begins to pick up.
The benefits of continuing mortgage refinancing to take advantage of historically low interest rates should also be feeding through to consumers' bank accounts.
The other notable exception in America's shopping malls has been the Gap, the clothing retailer, which finally appears to have rediscovered its form. After 29 straight months of same store decline, the Gap has now improved sales for two months in succession.
The Gap said sales in November were 9% better, the result of a back-to-basics policy. The company admitted it had lost its way by becoming too fashion conscious and is again putting out the kind of basic clothing that made it successful. In the same month in 2001, revenues had declined by 25% on the previous year.
The clear winner is the consumer. Many retailers, the Gap included, have resorted to marking prices lower already in the hope of luring shoppers in - with the likely result of hurting margins even if sales can be given a fillip.
For those who want to shop, there are bargains to be had.
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