Shoppers did their part this holiday season, spending more on clothes, jewelry and luxury items than last year, according to new sales tallies.
Retail sales from Nov. 5 through Dec. 24 were up 5.5% above the same period in 2009, according to MasterCard SpendingPulse, which tracks purchases by credit card, cash and other payment systems. That's better than many analysts had estimated. The National Retail Federation, which hasn't released its holiday totals yet, upgraded its forecast in mid-December to 3.3% from 2.3% after November sales came in far stronger than originally expected.
"Overall, it's a positive story this year," says Michael McNamara, vice president of SpendingPulse. "Most of the numbers are coming in at least at the high end of expectations."
"A Bounce-Back Year for Apparel"
For example, he noted apparel sales were up a strong 11.2% year-over-year. However, McNamara cautioned that apparel has a relatively easy comparison to last year, when sales were flat, after losing 7% in 2008. But sales also benefited from cold weather in most of the country during December, which helped move more expensive cold-weather gear such as coats and boots. "This was a bounce-back year for apparel," McNamara says.
Other nonessential gifts also did quite well, including jewelry, which rose 7.2% year-over-year, and other luxury items, which were up 6.7%. But again, McNamara cautions that those numbers are still below the prerecession peak. Jewelry, for example, remains 8.9% below where it was in 2007's holiday season, before the recession began.
On the weaker side, electronics sales were up only 1.2%, despite the interest in video consoles such as Microsoft's (MSFT) new Kinect system and e-book readers such as Amazon's (AMZN) Kindle. The drop was mainly due to lower prices for TVs, which are the big-ticket items in the segment. "You really need the TV sector to do well," says McNamara. "If TV prices are declining, you have to sell a whole lot more units to make up."
One area showing unequivocal growth is e-commerce, where sales rose 15.4% during the season. The online sector had been showing double-digit growth rates for some time, but the pace of expansion this season is different from a few years ago because it also shows the segment maturing and taking market share from the bricks-and-mortar merchants. "You're talking about material gains from the sales standpoint," says McNamara.
While the totals don't bring numbers back to prerecession levels, it shows a marked improvement over the past couple of years, especially the spending on nonessentials. Retail still needs employment to improve to show some real growth, but the industry appears to have hit bottom and resumed growth. Says McNamara: "We're going in the right direction."
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