All things considered, the holiday shopping season is off to a decent start. Here's why:Retail sales on Black Friday rose 0.5% to $10.66 billion, according to preliminary figures released by ShopperTrak, a research firm that tracks more than 50,000 outlets, the Associated Press reported.
In normal times, a 0.5% sales rise would be horrible, but in a U.S. economy weighed down by a 10.2% unemployment rate, 7.6 million lay-offs, and gasoline prices trending toward $3 per gallon, any sales increase is a moral victory.
The National Retail Federation trade group said Sunday it is sticking with its forecast for holiday sales to decline 1% from last year, the AP reported.
I'm sticking with my forecast of flat to a 1% holiday sales increase compared to 2008. Further, my own "totally unscientific" sampling of two malls over the weekend (one in the New York City metropolitan area, one in central Connecticut) revealed a common theme: lots of people browsing, with almost as many surprised at the lack of marked-down items. Americans, many of whom are budget-conscious (some, perhaps, for the first time in their lives), are looking for bargains. The problem is, with retailers and other stores having pared inventories in anticipation of light demand, shoppers are less likely to see items marked-down early – a common retail practice in previous years. With so little inventory to sell, retailers are under less pressure to slash prices, as they know even modest traffic will deplete their inventories.
Consumer confidence plays a large role in spending decisions, but while it has improved since February, Americans remain concerned about their overall job security and the nation's high unemployment rate. Job losses have started to abate, but that trend has apparently started too late to change buying patterns this holiday season, hence the modest retail sales outlook.
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