Retailers Get Coal In Stocking: Holiday Sales Dismal

Santa Claus gave retailers a big, fat lump of coal in their stockings this holiday season as retail sales nosedived to the worst in decades – a sign that a economy already rocked by financial waves is heading into yet choppier 2009 waters.

And there was yet another ominous sign for brick-and-mortar businesses: the Internet’s top retailer reported its BEST holiday SEASON ever.

News for retailers in general was grim:

Retailers’ sales fell as much as 4 percent during the holiday season, as the weak economy and bad weather created one of the worst holiday shopping climates in modern times, according to data released on Thursday by SpendingPulse.

The figures, from the retail data service of MasterCard Advisors, show the 2008 holiday shopping season was the weakest in decades, as U.S. consumers cut spending as they confront a yearlong recession, mounting job losses and tighter credit.

“It’s probably one of the most challenging holiday seasons we’ve ever had in modern times,” said Michael McNamara, vice president of Research and Analysis at MasterCard Advisors. “We had a very difficult economic environment. Weather patterns were not favorable toward the end of season, and that resulted in one of the most challenging economic seasons we’ve seen in decades.”

The figures exclude auto and gas sales but include grocery, restaurant and specialty food sales. Although SpendingPulse did not exempt the food prices, McNamara said the decline would have been steeper without them.

“There’s a lot of food that provide a buffer for the total retail sales numbers,” he said.

Here’s the AP’s video report on the sagging holiday sales:

Meanwhile, on the Internet, Amazon.com had its best holidays sales ever as traditional stores didn’t:

Amazon.com Inc., the world’s largest Internet retailer, rose as much as 4.9 percent in early Nasdaq trading after saying it had its best holiday-shopping season ever.

More than 6.3 million items were ordered worldwide on Dec. 15, its peak day, the Seattle-based company said today in a statement. The Internet retailer didn’t provide specific revenue or profit data, and a phone call to its media hotline wasn’t immediately returned.

Online spending at U.S. retailers dipped 1 percent in the holiday season through Dec. 19, research firm ComScore Inc. said last week, less than the 19 percent gain seen during the 2007 holiday season. Inclement weather during the second half of December may have caused more people to buy over the Internet instead of driving to the mall, SpendingPulse said yesterday.

Excluding fuel, total sales may have dropped 4 percent during the holidays, SpendingPulse said.

More than 5.6 million items were shipped on its peak day and 99 percent of goods arrived in time to meet holiday deadlines, Amazon.com said. Top-selling items included Samsung Electronics Co.’s televisions, Nintendo Co.’s Wii, Apple Inc.’s IPod touch, J.K. Rowling’s “The Tales of Beedle the Bard” and Stephenie Meyer’s “Twilight” books.

Now the question becomes? Can stores salvage at least part of their sales by attracting shoppers to day-after-Christmas sales…even when a holiday season marked by sales BEFORE Christmas and allowing haggling over prices in some stores didn’t work? Retailers hope so, Newsday reports:

Christmas may be over, but stores are viewing the day after Christmas and the upcoming week as another retail holiday and, perhaps, as a chance to make the season a little less dismal than analysts have predicted.

Over the years, Dec. 26 has become more than a day for consumers to return well-intentioned but unwanted gifts. Many stores open early and offer doorbuster specials, catering to recipients of holiday gift cards as well as shoppers looking to treat themselves.

After a disastrous 12 months for the industry – a battered economy, higher unemployment and bankruptcy filings – experts say they expect retailers will beckon shoppers with bigger discounts, especially with indications that recession-stressed consumers continued to cut back in December and left retailers with a larger-than-expected inventory to clear.

“They are going to have a lot of inventory to sell,” said Britt Beemer, chairman of America’s Research Group, a market research firm in Charleston, S.C. “When you are already at 60 and 70 percent off, how low can you go?”

That’s the question few want to think about — since the answer suggests 2009 will be tougher than 2008.