Cautious Shoppers Will Keep Holiday Sales Growth Low, Firm Forecasts

Illuminated Santa Claus in a department store in Bonn, Next to it a customer with christmas presents and shopping bag.
U. Baumgarten via Getty Images

Coming off of a weak back-to-school shopping period, a research firm expects sales growth will be slower this year during the crucial holiday season. Shoppers are also expected to visit fewer stores as they research purchases online.

Retail revenue in November and December should rise 2.4 percent during the biggest shopping period of the year, Chicago-based research firm ShopperTrak said Tuesday. That compares with a 3 percent increase in 2012 from 2011.

"Although the economy continues to recover slowly, consumers remain cautious about spending and are not ready to splurge," said ShopperTrak founder Bill Martin.

While the job picture has been improving in the U.S. and the turnaround in the housing market is gaining traction, the improvements have not been enough to sustain higher levels of spending for most Americans. Most continue to juggle tepid wage gains with a higher cost of living.

In August, revenue at stores opened at least a year -- a measure of a retailer's health -- rose 3.6 percent, according to a tally of 10 retailers by the International Council of Shopping Centers. That's up a tad from July's 3.5 percent gain, but below the 6 percent gain in August last year. The cautious spending last month capped a weak back-to-school selling season for retailers and raised questions about whether Americans would spend in November and December, a time retailers can make up to 40 percent of their revenue for the year.

ShopperTrak expects traffic will fall 1. 4 percent during November and December, compared with a 2.5 percent increase in 2012. That's partly due to people researching purchases more diligently before they go out shopping, Martin says.

"They're still purchasing the same amount and product they intended to, they're just not roaming from store to store looking for it," he said.

In addition, there's a shorter shopping window between Black Friday -- the day after Thanksgiving, which is usually the biggest shopping day of the year -- and Christmas. Last year there were 32 days during the period and this year there are 25.

Weekends are the busiest shopping period within that time frame. There are four weekends this year compared with five last year. Because of that, Martin expects stores to bring out their promotions and services like layaway early -- Toys R Us and Walmart (WMT) have both already announced their layaway plans. Layaway plans let consumers pay over time for holiday gifts.

"Retailers must have their holiday marketing and operations ready to go when November begins, as consumers will be ready to take advantage of those deals," said Martin.

The retail industry is still waiting for a widely watched holiday forecast from the National Retail Federation, the nation's largest retail trade group, which will be issuing its report early October. But the prediction from ShopperTrak, which counts foot traffic at 60,000 stores and blends it with government figures and its own proprietary sales numbers from stores, offers one of the first insights into how shoppers might spend during the season.

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Right... it's those pesky shoppers holding things back. It doesn't have anything to do with the fact nobody has any money.!! I'm sure China will hate to hear that.

September 17 2013 at 12:17 PM Report abuse rate up rate down Reply

I always give cash at Christmas - One size fits all, with never a return!

September 17 2013 at 10:30 AM Report abuse rate up rate down Reply

It is a question of trust, Do you trust the electric rate will not go up, do you trust the gov't not to take more taxes, Do you trust that food will not go up, how about gasoline, do you trust the Price not go up I for one do not trust anything. Everybody want more money or are trying to hold onto what they have. The people that make the rule are rich, Do they care? NO the lived a sheltered life. More is better. Hey why sell gas @$3.00 per gal when we chould sell it for $6.00 for the same amout of work? Hell if people want to see family they pay me to do it. or stay home.

September 17 2013 at 9:56 AM Report abuse -2 rate up rate down Reply

You mean people still buy stuff for Christmas? visa gift cards for grand kids during the year.........................let them choose how and on what they spend it on after Christmas wife is the only one I buy something for and I usually buy it way before Christmas..............example ..............all my shopping is done!!!!!!!!!!!!!!!

September 17 2013 at 8:52 AM Report abuse +2 rate up rate down Reply

They aren't cautious, they are broke. At what point is corporate America going to figure out that $10 an hour can barely buy food.

September 17 2013 at 7:57 AM Report abuse +4 rate up rate down Reply