AP and CNBC Agree That Christmas Shopping Season Has Been Awful, But Miss Its Two-Tiered Nature and Likely Obamacare Impact
Concerning the Christmas shopping season, the Associated Press’s Anne D’Innocenzio and CNBC’s Krystina Gustafson agree: It has stunk.
D’Innocenzio noted that “sales at stores have fallen for the third consecutive week as Americans continue to hold back on spending during what is traditionally the busiest buying period of the year.” Gustafson, apparently looking over the same ShopperTrak data as D’Innocenzio, added that “store traffic in the final week before Christmas posted the third straight week of double-digit declines.” Neither noted that combination of much lower traffic and relatively slight sales declines appears to indicate that the well-off are splurging, while many families of average means are AWOL. Though it’s hard to see how, the keepers of Christmas data at ShopperTrak the National Retail Federation and the International Council of Shopping Centers still believe they will end up in meaningfully positive territory when all is said and done.
Maybe — no, definitely — it’s expecting too much to believe that business reporters might figure out that millions of people being forced to cough up hundreds of extra dollars per month starting in January to pay their Obamacare premiums might be putting a serious crimp on shoppers’ appetites for extravagance.
D’Innocenzio noted that deep discounting has become more rampant (bolds are mine throughout this post):
Retailers started the season cautiously optimistic. But after a strong start through most of November – ShopperTrak said sales were up 3.4 percent for the month – retailers have found it increasingly hard to attract shoppers into stores despite big discounts and expanded hours during the final days.
“It’s been a mediocre December,” said Bill Martin, co-founder of ShopperTrak.
… At the Garden State Plaza Mall in Paramus, N.J. on Saturday, Abercrombie & Fitch, AnnTaylor and Express had 50 percent sales, while Aeropostale was discounting its entire assortment up to 70 percent. Still, shoppers were cautious.
Gustafson further noted that some retailers are acting as if it’s after Christmas already:
… if sales over the last few days before Christmas aren’t terrific, negative fourth-quarter earnings revisions could follow.
Some retailers are already looking past the mistletoe and eggnog, promoting their after-Christmas sales before shoppers even unwrap their gifts. Gap’s Old Navy sent out email alerts that its after-holiday sales started Sunday, offering up to 75 percent off throughout the store. L Brands’ Victoria’s Secret also kicked off its semiannual sale online Monday.
Many analysts had predicted aggressive sales would continue in the post-holiday environment to snag extra transactions and round out solid December numbers.
“We expect the final two weeks of the month to be more promotional than most companies expected,” Lejuez said.
A separate AP report by D’Innocenzio five days ago indicated that “the amount of discounting at stores is up 13 percent from last year – the highest level since 2008.”
So here’s third implication, beyond the two-tiered Christmas and the likely impact of Obamacare sticker shock: If retailers’ profit margins take a beating, there’s a pretty good chance that deeper than usual post-Christmas layoffs will follow.
The educated guess here is that almost none of this is making the evening news shows and reaching low-information voters — yet. If this Christmas shopping season really turns out as bad as it currently appears, that will make some of the post-year-end news about layoffs and slow or no economic growth that much more of a surprise when it breaks through the fog.
Cross-posted at NewsBusters.org.