Holiday season is usually the time for shoppers to make some
of the biggest purchases of the year. However, the flagging
economy has somewhat dented consumer confidence, leaving the
possibility that this holiday season might end on a soft
Meanwhile, politicans have yet to find a solution to the
impending "Fiscal Cliff". Analysts are predicting another
recession if Republicans and Democrats fail to agree on ways to
avert the automatic austerity measures and tax hikes before the
start of next year.
Huge discounts, promotional activities and other
buyer-friendly moves by retailers failed to boost confidence.
Consumers are worried about issues related to personal disposable
income, the business climate and the economic woes. A report by
Thomson Reuters and the University of Michigan reveals that
consumer sentiment has been hit hard due to the ongoing economic
impasse, falling to 72.9 in December from 82.7 in November.
ShopperTrak stated that both foot traffic and retail sales
dropped 4.4% and 4.3%, respectively, for the week ending December
15 from the prior-year period. The Chicago-based retail analysis
firm also trimmed its sales growth forecast for the holiday
season, blaming the huge discounts and the adverse impact of
ShopperTrak now projects holiday sales for November and
December to rise only 2.5%, down from 3.3% increase previously
forecasted in September 2012. The current estimate also fares
unfavorably with 3.7% growth achieved in the prior-year holiday
Data compiled by International Council of Shopping Centers
(ICSC) hinted of comparable-store sales growth of 3% during
November and December, against a 3.3% increase in the prior-year
period. For December, ICSC is projecting retail sales to rise
between 4% and 4.5%.
The National Retail Federation reiterated its holiday sales
forecast for a 4.1% jump in November and December to $586.1
billion, which is short of the 5.6% growth registered last year.
A study done by the nation's largest retail trade group and
Macroeconomic Advisors hinted that if the "Fiscal Cliff" is
averted, retail sales may increase 2% to 2.5% in 2013. However,
failure to avoid the "Fiscal Cliff" may lead to flat sales or a
contraction in the first half of next year.
Sensing these challenges, retailers such as
Costco Wholesale Corporation
Limited Brands Inc.
) and others have been actively making efforts to win the hearts
of bargain hunters. We'll have to wait and see if their moves are
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