By early December, the traditional start of the holiday buying rush, Coach, Target and Starbucks — arguably the reigning trendsetters among American retailers — warned that the number of consumers walking into their stores had begun to dip, or was likely to, as consumers restrained their spending.
Coach cautioned that the 20 percent growth rate for handbags over the last several years would most likely fall to 10 percent for the final months of this year — nothing to be ashamed of, but a significant setback. And Target, which is used to monthly sales increases of 4 percent or more for its stores, said results for December could fall 1 percent, a rarity for the chain.
A final sales tally from the season will not be available from most chains until next week. But an early projection from MasterCard Advisors, a unit of the credit card company, found that overall spending from Nov. 23 to Dec. 24, when adjusted for inflation, was essentially unchanged over last year, a weak performance.
A last-minute shopping frenzy probably wasn't enough to meet modest holiday sales forecasts, according to the latest retail estimates and discount giant Target. (TGT)
Same-store sales rose 2.8% in the week ended Dec. 22, the biggest weekly gain in two years, according to the International Council of Shopping Centers. But that didn't make up for poor showings in the weeks leading up to Christmas.
"Given the slow performance at the beginning of the month, it appears that the industry is on track for a sales gain that is slightly under our original expectation," ICSC Chief Economist Michael Niemira said in a statement.
As a result, retailers are offering "desperation discounts""
Dillard's Inc., Macy's Inc. and Home Depot Inc. slashed prices the day after Christmas as U.S. retailers attempted to avoid the worst holiday-shopping season since 2002.
Spending surges after the Thanksgiving holiday and last weekend weren't enough to boost holiday buying as consumers facing $3-a-gallon gasoline and declining home values limited gift purchases. The International Council of Shopping Centers lowered its November and December sales forecast yesterday.
``People should expect dramatic discounts, and in some cases, desperation discounts,'' Burt Flickinger, managing director at Strategic Resource Group, said yesterday in an interview on Bloomberg Radio.
Saks Inc. held a one-day, 70 percent-off sale yesterday on designer clothes. Dillard's is selling women's cashmere sweaters for 40 percent off. Polo Ralph Lauren Corp. was selling handbags at almost a 60 percent discount.
Bottom line -- things aren't looking that good for retailers right now.