The first batch of holiday retail sales data just came in and at first glance the results seem somewhat lackluster:
- According to research conducted by MasterCard Inc. (MA), holiday sales rose just 0.7% from the end of October through Christmas Eve—this is compared with last year’s 2% increase.
- A separate report from the International Council of Shopping Centers (ICSC) showed a 0.7% increase in holiday sales for the week ended Saturday.
These two reports have the bears saying that this could be the worst holiday season for retail sales since 2008. If you remember back to then, that was during the height of the recession when sales dropped 4.4% in November and December. However, this news didn’t faze the markets this morning, and here’s why.
Aftereffects of Super Storm Sandy
A few talking heads have jumped to the conclusion that retail sales are lagging due to concerns about the Fiscal Cliff but I don’t think that was it at all. A recent Reuters poll estimated that two-thirds of American adults didn’t adjust their holiday spending plans while just 17% spent less. However, I don’t doubt that Super Storm Sandy put a damper on sales in the Northeast—MasterCard reported a 3.9% drop in this region.
Across the board, e-commerce posted big gains this year. According to the MasterCard report, online sales rose 8.4% this holiday season. Meanwhile, the IBM Digital Analytics Benchmark reported a 22.4% jump in online sales on Christmas day alone. And the hottest mobile device on the market was Apple Inc.‘s (AAPL) iPad, which drove 12.5% of online sales.
The “Seven Days of Christmas”
Believe it or not, the week after Christmas accounts for about 15% of total holiday sales. That’s because the lure of post-holiday sales and the need to redeem gift cards or return gifts will bring shoppers back to the stores in droves.
The Big Picture
I’m not putting too much stock in the MasterCard report. After all, this data covers less than a third of U.S. retail sales, and this report has historically been more lackluster than the National Retail Federation’s retail sales report, a much more comprehensive measure of national sales. In fact, last year, the National Retail Federation reported a 5.6% jump in holiday sales—nearly triple MasterCard’s 2% estimate.
As for this holiday season, the National Retail Federation is still standing by its 4.1% sales estimate. Meanwhile, the ICSC forecasts 3% growth for retailers this holiday season. While these estimates represent a slight slowdown from last year, that’s nowhere near the contraction we saw in 2008.