Robust holiday retail could mean 'shopping hangover' for Jan., Feb.
Home Accents Today Staff -- Home Accents Today, 1/3/2012 11:54:56 AM
Early reports are providing evidence of a strong finish to the robust holiday retail season just ended, but some analysts say a "shopping hangover" could be in store for January and February.
Same-store sales rose 4.3% year-over-year during the week ended Dec. 24, according to the Johnson Redbook Retail Sales Index, and the ICSC-Goldman Sachs weekly chain store sales index rose by 0.9% for the week ending Dec. 24 compared with the prior week.
"Retailers said much of the week's business was done on the day of Christmas Eve as shoppers flocked to stores for last minute shopping," said Catlin Levis, Redbook analyst. Slower sales of seasonal apparel prompted some retailers to offer even steeper markdowns, she said, "and profit margins are expected to be under pressure due to this highly promotional environment."
A report from The International Council of Shopping Centers' Shopping Centers Today reveals credit card purchases jumped more than 7% year-on-year in November and surged again in the first two weeks of December, driven by merchant discounting and improved consumer confidence. Among retail categories, clothing, accessories and general merchandise stores posted the most growth during the holidays, the report said.
However, as a result of those maxed-out credit cards, post-holiday spending could plunge to some of the lowest levels in years says Britt Beemer, CEO of consumer research firm America's Research Group.
"Now that those credit card bills are hitting mailboxes, shoppers will cut back in a very significant way relative to January and February of the last few years," Beemer said. "Black Friday was so big that Americans in record numbers - 43.8% - said that they exceeded their spending limits. These numbers are much higher than the 15% and 16% that signaled major drops in credit card usage that we've seen in the last couple of years. Americans now face the challenge of bigger credit card debt until they get their income tax refunds - but, regardless, spending levels will drop for at least the month of January as the sticker shock hits big-time."
Another reason for higher credit card debt, added Beemer, is a 10% increase in online spending which is totally credit driven. "Unless consumers see ‘70% off,' they will be holding back in January, and in February, and possibly into the spring."
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