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A Weary Holiday Consumer

Written by Tom Ryan

ShopperTrak on Wednesday trimmed its holiday forecast, saying the selling period would have "a different tone" in the wake of three shocks — the school shootings in Connecticut, Hurricane Sandy and the impasse over the fiscal cliff.

"It's a change in mind-set," Bill Martin, founder of ShopperTrak, which tracks mall traffic, told CBS Marketwatch. "Gifts may not be as important as spending time with family. This holiday season is just not going to be as robust."

ShopperTrak made its reassessment after it found traffic and sales were surprisingly down in the week ended Dec. 8.

While a fiscal cliff showdown seems to have been widely expected by economists, retail analysts and political pundits, Mike Duke, Walmart's CEO, speaking early last week at a Council on Foreign Relations event in New York, said that only 25 percent of its core U.S. shoppers knew what the term "fiscal cliff" meant a week before November's presidential election, based on internal polling by the chain.

"One week after the election it was up to 75 percent," said Mr. Duke, according to Daily Finance. He added that 15 percent of those customers indicated that the debate in Washington would affect what they spend for Christmas.

In early December, The Thomson Reuters/University of Michigan's preliminary reading of its index of consumer sentiment plunged to 74.5, from 82.7 in November and its lowest level since August. Many reports blamed the fiscal cliff headlines.

Other reports also noted a slowdown in spending since Black Friday hysteria, possibly due to two extra days this holiday season between Thanksgiving and Christmas. But most also cited fiscal cliff concerns.

"The lull is a bit more pronounced," Andrew Lipsman, VP for industry analysis at ComScore, told St. Louis Today last week. "We're not sure if that reflects a dip in the consumer confidence index or just the way the calendar falls."

While emotions following the shootings in Connecticut are still raw, Sandy doesn't appear to be affecting the overall country's spending mood given Black Friday's strength. But apparel discounts as large as 50 percent are indicating that some chains have failed to recoup sales lost due to shuttered stores in late October and early November.

The apparent shortfall is said to be putting more pressure than recent years on the final 10 days leading up to Christmas, which account for nearly 24 percent of the holiday season's total, according to SpendingPulse.

"Super Saturday — the last Saturday before Christmas — is going to have to live up to its name," Michael McNamara, global solutions leader at MasterCard SpendingPulse, told the New York Post.

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