Lackluster sales during last holiday weekend at brick-and-mortar stores

Fewer consumers were in stores shopping, and retail analysts found fewer buying at brick-and-mortar establishments over the crucial final holiday shopping weekend, a combination of factors that left retailers pushing discounts after a year that saw only modest economic improvements for buyers and sellers.  

According to analytics firm RetailNext, the number of visits to physical stores fell 7 percent Friday and 5 percent Saturday, with no change Sunday, while U.S. sales at physical locations also fell by a mid-single-digit percentage, compared with the same days — the weekend before Christmas — last year. 

The figures for 2013 do not include online sales, which have been strong. From Nov. 1 to Dec. 9, online sales jumped by 25 percent from last year to $31 billion, according to comScore. The decline in brick-and-mortar retail sales could be offset by online sales, when final figures are calculated, according to RetailNext, which tracks physical retail sales as a specialist in applied big data.

The retail figures emerged as the U.S. Commerce Department said Monday that consumer spending in November rose 0.5 percent from October, the best showing since June. A jump in spending on durable goods such as automobiles accounted for the gain, according to the report.

Consumers' income also rose 0.2 percent in November, an improvement from a 0.1 percent decline in October. Wages and salaries, the most important component of income, rose 0.4 percent. Consumers' disposable income, however, only rose 0.1 percent — still a sizeable improvement from a 0.2 percent decline in October. The gains reflected strength in the private sector and a modest gain in government pay.

Consumer spending is closely followed because it accounts for about 70 percent of economic activity. November's numbers suggests solid economic growth this quarter.

But retailers may see the official numbers as too rosy and analysts have said this is turning out to be the most difficult holiday season since the recession. Wage stagnation has made bargain-hunting attractive, and many cost-conscious shoppers may be delaying holiday purchases until post-holiday sales, suggested the vice president of insights at RetailNext, Chitra Balasubramanian who based her analysis on more than 500 stores and more than 10 million shopping trips between the comparable pre-Christmas and post-Thanksgiving weekends for both 2013 and 2012. 

A later Thanksgiving meant there were six fewer shopping days in 2013 than there were last year, so holiday shopping "kind of crept up" on consumers, she said. Her analysis found more shoppers turning out and buying on Sunday, which "shows a little bit of that last-minute mindset."

And, although people who made purchases spent more, fewer consumers made purchases.

"We're seeing an increase in the average transaction value by 2 to 3 percent over last year," said Balasubramanian. The result is an overall decrease in sales at physical stores. She declined to give year-on-year comparisons of actual expenditures until after Jan. 5, which is traditionally the close of the holiday shopping season. 

Another possible reason behind the slow weekend was that many shoppers took advantage of Black Friday deals, when many stores opened earlier and closed later than they had the year before, she suggested. Indeed, the average sale during Black Friday weekend was 28 percent higher in 2013 than it was in 2012. "People were spending more money around Thanksgiving," she said.

"Presumably, we are going to see some offsetting from online sales," Balasubramanian said.

In response to the low brick-and-mortar sales figures, major retailers significantly ramped up the frequency of their promotions in the first part of December, according to data prepared for Reuters by Market Track, a firm that provides market research for top retailers and manufacturers. 

The holiday season generates 30 percent of sales and 40 percent of profits for many stores, analysts say.

Experts expect the promotions to continue until the very end of the season in January. John Yozzo, a managing director at FTI Consulting in New York, said, "Without question, the shopper is in the driver's seat."

"Retailers recognize that consumers will wait as long as they need to," said Charles O'Shea, senior analyst at Moody's Investors Service, who noted bigger discounts this weekend than in the corresponding weekend in 2012 as he did store checks in various cities.

As of the past weekend, only two-thirds of Americans are all or almost finished with their Christmas shopping, according to a survey by consumer research firm America's Research Group and Inmar.

Of those not finished shopping, consumers holding out for bigger bargains is up to 25.1 percent from 20.8 percent last year, the firm said.

The problem is particularly acute for specialty apparel retailers, O'Shea added, pointing to teen apparel chain Abercrombie & Fitch as one of the stores with the most noticeable increases in price cuts.

Rival Aeropostale Inc, which is trying to stanch deep sales declines, was touting up to 70 percent off everything in its stores on Sunday.

While electronics chains have benefited from items like Microsoft Corp's Xbox One video-game console and Sony Corp's rival product PlayStation 4, clothing has been a harder sell, he said.

One analyst suggested that consumers may be delaying their holiday spending until after Dec. 25 in the hope of snagging even better deals.

"We expect the next two weeks to pick up a lot of the slack," wrote Topeka Capital Markets analyst Dorothy Lakner in an analysis of the current shopping season.

It remains unclear if credit card sales have been affected by a massive security breach at Target Corp., which saw hackers steal data from up to 40 million credit and debit cards of shoppers who visited stores during the first three weeks of the holiday season in the second-largest such breach reported by a U.S. retailer.

The U.S.'s third-biggest retailer suffered reduced customer traffic over the busiest shopping weekends of the year in the wake of a massive breach, the Wall Street Journal reported on Sunday, citing retail consultancy Customer Growth Partners LLC.

On a positive note, despite a winter storm that hit major Midwestern markets such as Chicago and Detroit, no event was severe enough to disrupt holiday shopping in any part of the country, said Evan Gold, a senior vice president at Planalytics, a weather consulting firm in Berwyn, Pa.

Gold predicted no weather-related shopping disruptions in the last two days before Christmas.

Al Jazeera and wire services