Posted on Tuesday, December 21, 2010
NEW YORK — Packed malls? Healthy gains in holiday spending? It's beginning to look at least a little like a pre-recession Christmas.
Americans spent more on clothing, luxury goods and even furniture, delivering healthy gains across the board, according to MasterCard Advisors' SpendingPulse, which tracks spending across all transactions including cash. The online category continued to be a bright spot. The big exception was consumer electronics, dragged down by deep discounting of TVs amid a glut. That area was virtually unchanged from a year ago.
"This is the first normal Christmas in three years," said Michael McNamara, vice president of research and analysis for SpendingPulse. He said there is "genuine demand" for a variety of products, even higher-ticket items.
Sales of clothing rose 9.8 percent, with particular strength in men's clothing. Jewelry revenue rose 2.6 percent and furniture rose 3.4 percent, according to SpendingPulse, whose data covered the period from Oct. 31 through Saturday compared with the same period a year ago.
Malls reported higher traffic over the weekend, including the Saturday before Christmas, known as "Super Saturday." It's one of the busiest shopping days of the year. Research firm ShopperTrak expects it will be the third-busiest this year. The lack of any major storms nationwide was a boon for shoppers.
The strong numbers are encouraging to retailers, who only this fall remained worried that the inventory they ordered earlier in the year when the economic recovery looked stronger might end up being too much.
But after a slowdown in spending this summer, spending has picked up amid more positive economic signs. McNamara said that there's no evidence of emergency discounting and that stores have appropriate levels of inventory.
Robin Lewis, CEO of The Robin Report, a retail insiders' newsletter, said the spending stems from three factors: consumers have been paying down their debt slightly, the savings rate has decreased slightly and working hours have increased, partly due to seasonal demand.
"Those three things put a few more bucks in their pocket," which becomes signficant combined with pent-up demand.
Still, spending is still below pre-recession levels in many categories. McNamara estimated that furniture is about 20 percent below the level before the Great Recession, while luxury and jewelry sales are about 10 percent below the peak before the big downturn. Clothing sales are recovering faster.
At the Mall of America in Bloomington, Minn., the nation's largest mall, Public Relations Director Dan Jasper said a big snowstorm the weekend before that closed the mall early had shoppers packing the mall to catch up. Preliminary reports showed 200,000 came to the mall Saturday, making it one of its busiest days ever and the busiest day so far this year.
"People are a little panicked. I'm hearing them say `We've gotta get this done,' and that doesn't usually show up until the 22nd or the 23rd."
It wasn't the only mall that saw packed stores and parking lots. Greg Maloney, CEO of the retail practice of Jones Lang LaSalle, which operates about 90 malls across the country, said traffic was up 10 percent to 12 percent across the country over the same weekend last year.
Karen MacDonald, a spokeswoman for Taubman Centers Inc., which owns or manages 26 shopping centers, said many stores were reporting higher traffic.
Most shoppers still had about half their Christmas shopping left heading into the weekend, according to the National Retail Federation trade group. It raised its holiday sales forecast last week to a 3.3 percent rise, approaching 2007 levels, from an earlier forecast of a 2.3 percent increase.
In an interview with The Associated Press last week, Myron E. Ullman III, chairman and CEO, noted that he feels good about the holiday season so far, and that inventory is in line with demand. Like many other retailers, Penney had slim offerings last Christmas because it worried about having too many leftovers. Consequently, many merchants, including Penney, sold out of some items earlier in the 2009 Christmas season.
"People seem to be feeling better," he said.
Shoppers stuck to lessons learned during the recession: using cash, not credit, and sticking to a budget. Although they are spending slightly freer, with unemployment still stuck at 10 percent and a strained housing market consumers are still under pressure to spend wisely.
"The consumer has returned, not blindly, but thoughtfully," said Stifel Nicolas analyst Richard Jaffe.
"I have a budget and when it's gone, it's gone," said Nicala King of Vancouver, Wash., who was at Barnes & Noble picking up a few final items. She was set on preserving the savings she built up after paying off her credit cards last year.
Retailers are offering promotions that are more planned than last year, Wall Street Strategies analyst Brian Sozzi said.
Ann Taylor Loft, for example, has had a 40 percent off promotion in its stores since Black Friday, although on Saturday it increased that to 50 percent off for sweaters.
"It's not slash-and-burn on prices, but promotions are out there, and that is one of the main ingredients driving sales," he said.
Online shopping was going strong as well. On Saturday, online retail spending rose 18 percent, and the average order size rose 4 percent to $169.04 compared to the same day a year ago, according to IBM Coremetrics. As of Friday, shoppers have spent $27.46 billion online since Nov. 1, up 12 percent from last year, according to research firm comScore Inc.
Paul and Connie Surface drove about 60 miles Saturday from their Waveland, Ind., farm to downtown Indianapolis to buy a bottle of Coach Inc.'s Poppy perfume for their daughter-in-law and take in the mall scene. They've shopped every weekend since Thanksgiving and are pretty much finished.
"This is not a bad economy if you've got a job," said Paul, 62. "The stores are discounting nice, and the interest rates are low."
AP Business Writers Sarah Skidmore in Portland, Ore.; Anne D'Innocenzio in New York; and Tom Murphy in Indianapolis contributed to this report.
ANNE D'INNOCENZIO and MAE ANDERSON Huffington Post