According to the Financial Times, US shopping patterns for early November suggest budget-conscious consumers are holding back their Christmas spending, while waiting to be enticed by special events such as this weekend’s post-Thanksgiving sales.
Sales data for the first two weeks of November compiled by MasterCard Advisors’ SpendingPulse report showed a weakening of clothing and luxury goods sales that had shown signs of year-on-year improvement in October.
Speciality clothing store sales, for instance, fell 5 per cent against the same period last year, when they saw a double-digit percentage drop. Last month, clothing sales rose 3.4 per cent, against similarly poor numbers from last year.
Luxury goods sales fell 9.2 per cent during the first two weeks of the month, in spite of tracking the collapse in luxury selling of a year ago. In October, luxury sales were up 6.6 per cent against the previous year.
SpendingPulse estimates are based on aggregate spending data from MasterCard credit and debit cards, and projections of other forms of spending, including other cards, cash and cheques.
Kamelesh Rao, director of economic research at SpendingPulse, said the overall data suggested that “the consumer is still somewhat cautious about spending”.
“The consumer spending environment has essentially been on a plateau since the summer,” he said.
But the data also lent support to the theory that shoppers are this year playing a waiting game with retailers, holding out in expectation of the kind of extreme promotional price cutting that characterised last year’s post-crash Christmas.
Robert Drbul, retail analyst at Barclay’s Capital, said in a note to clients on Monday that stores had seen a slow early November, which he attributed to “event shopping” – with consumers holding out for promotional offers ahead of events such as the annual post-Thanksgiving “Black Friday” sales.
Mr Drbul predicted “very heavy traffic and discounting” during the Thanksgiving sales, followed by another lull as shoppers wait again for pre-Christmas price cuts.
“Consumers will again likely wait for additional aggressive discounting and promotional activity during the last 7-10 days leading up to Christmas, as a search for deals and values continues,” he said.
A survey of 3,400 consumers for retail consultants at AlixPartners, conducted in the first week of November, also found that 55 per cent of those surveyed intended “to wait for sales and specials” before buying.
The National Retail Federation said on Monday that a survey of more than 8,000 shoppers indicated that the number of customers planning to visit stores for Friday’s post-Thanksgiving sales would climb 4.6 per cent from last year to 134m. One in 10 respondents said they planned to visit stores between midnight and 3am in search of early bargains.
In an indication of the intensely competitive mood, Target, the mass discounter, announced on Monday that it would offer customes $10 store gift cards for every $100 they spend this Friday morning – an unprecedented move for the retailer.
Image: Sales
Source: Financial Times