A Less Merry Christmas Shaping Up

Dec 16, 2003

By George Anderson

Expectations were high heading into the 2003 holiday period as many retailers and manufacturers were looking to ring up solid gains for the season.

The performance to date of bellwether companies such as Wal-Mart and Target, however, suggests the reality of the season may fall short of analysts’ projections.

Yesterday, Wal-Mart announced it expected to come in on the low end of its forecast with sales increases in the vicinity of three percent.

Target reported sales were below plan for the period.

Michael Niemira, chief economist and director of research, the International Council of Shopping Centers, told the Associated Press, “We’re probably still on track for
a good season, though business has been uneven with the weather.”

In addition to weather factors, industry observers see the lower than hoped for sales resulting from consumers waiting out retailers for bigger discounts, a bigger than expected
increase in online shopping, still to be redeemed gift cards and concern over a recovering economy that has yet to produce jobs.

Many are looking for a late push, noting that sales for the seven days leading up to Christmas represented 41 percent of last year’s holiday total. In 2001, 34 percent of the
season’s sales were done in the last seven days, according to numbers from the International Council of Shopping Centers.

Moderator’s Comment: What stands out most to you on the way this year’s holiday sales season is shaping up? Has anything surprised you?

We have to admit being surprised by the Wal-Mart announcement. Consumers are aware of Wal-Mart’s EDLP approach to business and would know, or so we thought,
that much better deals are not on the way.

Our expectation going into this year was that Wal-Mart would be one of the leaders in year-over-year sales. If Wal-Mart comes in around three percent, what
will the rest of the retail business look like?
Anderson – Moderator

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