Record Crowds Over Weekend, but Spending Declined

How Holiday Shoppers Feel
Bebeto Matthews/AP

NEW YORK -- Retailers got Americans into stores during the start to the holiday shopping season. Now, they'll need to figure out how to get them to actually shop.

Target (TGT), Macy's (M) and other retailers offered holiday discounts in early November and opened stores on Thanksgiving Day. It was an effort to attract shoppers before Black Friday, the day after Thanksgiving that traditionally kicks off the holiday shopping season.

Those tactics drew bigger crowds during the four-day Thanksgiving weekend, but failed to motivate Americans to spend.

"The economy spoke loud and clear over the past few days," said Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors. "We are going to see an increase in markdowns."

A record 141 million people were expected to shop in stores and online over the four-day period that ended on Sunday, up from last year's 137 million, according to the results of a survey of nearly 4,500 shoppers conducted for The National Retail Federation.

But total spending was expected to fall for the first time ever since the trade group began tracking it in 2006, according to the survey that was released on Sunday afternoon. Over the four days, spending fell an estimated 2.9 percent to $57.4 billion.

Shoppers, on average, were expected to spend $407.02 during the four days, down 3.9 percent from last year. That would be the first decline since the 2009 holiday shopping season when the economy was just coming out of the recession.

The survey underscores the challenges stores have faced since the recession began in late 2007. Retailers had to offer deeper discounts to get people to shop during the downturn, but Americans still expect those "70 percent off" signs now during the recovery.

And stores may have only exacerbated that expectation this year. By offering bargains earlier in the season, it seems they've created a vicious cycle in which they'll need to constantly offer bigger sales. Shoppers who took advantage of "holiday" deals before Thanksgiving may have deal fatigue and are cautious about buying anything else unless it's heavily discounted.

Matthew Shay, president and CEO of The National Retail Federation, said that the survey results only represent one weekend in what is typically the biggest shopping period of the year.
The combined months of November and December can account for up to 40 percent of retailers' revenue.

Overall, Shay said the trade group still expects sales for the combined two months to increase 3.9 percent to $602.1 billion. That's higher than the 3.5 percent pace in the previous year.

But to achieve that growth, retailers will likely have to offer big sales events. In a stronger economy, people who shopped early would continue to do so throughout the season. But analysts say that's not likely to be the case in this still tough economic climate.

"It's pretty clear that in the current environment, customers expect promotions," Shay said. "Absent promotions, they're not really spending."

Take Tuesday Trasvina, 37, who said she's been bombarded with holiday discounts since early November. Trasvina, a marketing coordinator, plans to spend $500 on holiday gifts, about a quarter of what she spent last year.

"They've been stretching out this Black Friday thing so long," said Trasvina, who was shopping with her husband on Friday at a Target store in Portland, Ore. "I just think the over-commercialization of the holiday has gotten to us."

At least a dozen major retailers -- most of them for the first time -- opened on Thanksgiving instead of on Black Friday, which is typically the biggest shopping day of the year. Walmart (WMT), Toys R Us and other retailers said Friday that Thanksgiving crowds were strong.

But the early start appeared to pull sales forward. Black Friday sales fell 13.2 percent from the previous year to $9.74 billion, according to Chicago-based technology firm ShopperTrak. But combined spending over Thanksgiving and Black Friday rose 2.3 percent to $12.3 billion compared with a year ago.

A Kmart (SHLD) store in New York City that opened at 6 a.m. on Thanksgiving and stayed open for 41 hour straight was packed on the holiday. Clothing was marked down 30 percent to 50 percent.

Adriana Tavaraz, 51, headed there at about 4 p.m. and spent $105 on ornaments, Santa hats and other holiday decor. She saved about 50 percent.

But it's not likely Tavaraz will be back in stores too many more times this season. Money is tight this year because of rising costs for food and rent, and Tavaraz already spent much of her $200 holiday budget.

"Nowadays, you have to think about what you spend," she said. "You have to think about tomorrow."

-Sara Sell in Portland, Ore., contributed to this report.

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jan snowhill

Christmas shopping has always been a weather report on the economy. It's about job confidence and usable or disposable income. They keep saying America's economy is 70% based on consumption by Americans. If you continue to starve the middle working class with stagnate wages and low skill low paying jobs then shopping for Christmas sales will dramatically drop. Share holders will be told sales will rise each quarter to bolster stock prices but this year it appears reality will prevail. The economy of America is really really damaged. The only way to turn this thing now is a higher minimum wage, more full time work, more better paying quality jobs and more of them. Something the private sector could do if it had the will or want to supply more usable income to Americans. Americans have stretched their budgets as far as those wages and jobs will carry them. Not sharing any increased profits with employees for the last 30 years has brought us to this Christmas. Keeping share holders happy and satisfied with constantly increasing profit margins by holding down wages and the number of employees needed and not sharing any of that increased productivity in the form of raises for so long it has destroyed the buying power of Americans. Business has created it's own doom to continue on this path of redistributing all the wealth to the top and to Wall street. Time to share or it all stops.

December 02 2013 at 9:26 AM Report abuse +1 rate up rate down Reply

What a shock, no surprise here. The economy is still circling the drain and now we have insurance premium increases to deal with. You'd think these geniuses would of figured out what huge premium increases will do to discretionary income, but I guess not.

December 02 2013 at 9:07 AM Report abuse +1 rate up rate down Reply
1 reply to mikey1109's comment

What are you suggesting? The American consumer is saving back money from X-mas to pay for increased insurance premiums due in January? Naw, not the nature of the beast. This holiday season might not be a record, but when its all said and done, will probably fair pretty well.
Welcome to the world of app's in the retail world. My nephew loves these app's. It lets him know 24-7 when items he wants come down a penny or more in a nano- second. Not to mention this is Cyber- Monday. So while you might believe the economy is circling the drain, its doing so with a hand on the cheapest prices available. And you never know. A 70 inch TV, just might plug the hole.

December 02 2013 at 9:32 AM Report abuse rate up rate down Reply

When your insurance prices are going to double, your disposable spending has to be cut in half. This ain't rocket science, and when you do not spend companies will have to lay off!

December 02 2013 at 8:21 AM Report abuse +1 rate up rate down Reply

The best gift is money so people can pay their save the wasted cost of wrapping paper and the gift is so much more appreciated. Then in January everyone can get all the store inventory for just about ziltch because they will give it away .

December 02 2013 at 8:20 AM Report abuse +2 rate up rate down Reply

The public is not falling for the store buy buy buy crap!.... The season is not about gifts its about the birth of a saviour. The stores commercialize everything for their fat gain and benefit. I personally think the public should stick it to the fat CEO's

December 02 2013 at 8:17 AM Report abuse +4 rate up rate down Reply

people are getting smarter and not being stupid and run up their credit cards or spend their savings...the economy is still very weak. Jobs are NOT being created!! Bond market will explode like back in the Michael Milken days ...stock market way over rated.....

December 02 2013 at 8:16 AM Report abuse +2 rate up rate down Reply

The 1% don't shop at Sears.

December 02 2013 at 8:08 AM Report abuse -1 rate up rate down Reply

Considering the overall cost of living these days, by the time most people pay their rent/mortgage payments, utility bills etc. For most there isn't a whole lot of extra money left. And now that people are forced to purchase health insurance they have that additional monthly expense added to their existing tight monthly budgets.

December 02 2013 at 7:59 AM Report abuse +2 rate up rate down Reply

if 49 million don't have money for can they spend for Christmas?

December 02 2013 at 7:59 AM Report abuse rate up rate down Reply
1 reply to scottee's comment

They are the only ones who are spending, They do NOT have to spend their cash on Rent thanks to section 8, on school lunch thanks to free or reduced school lunch, on Insurance thanks to s-chip, on heating thanks to TANIF, They don't have to pay taxes thanks to a zero fair share, on food thanks to SNAP, Their cell phone is free, and on top of thet they ger a EIC refund.

December 02 2013 at 8:25 AM Report abuse +1 rate up rate down Reply
4 replies to gkm628b's comment