Holiday Sales numbers Flowing In – Large Year over Year Drop
A division of Mastercard, known as SpendingPulse calculates consumer spending on its cards and other methods to determine how much money was spent over the holiday season. Even though Amazon made it out with a great holiday season, offline retailers were destroyed with a drop anywhere from 2 to 4% and excluding car and gas sales a drop of 5.5 to 8%.
The numbers were calculated from November 1 through December 24 by spending per person. There are a variety of reasons why these numbers may be lower. First, many consumers didn’t start shopping until late in the season this year and simply ran out of time to buy as much as they had last year. Second, unemployment is much higher this year than last. And third, the recession has left the average American with less to spend than before, a limited supply of credit certainly isn’t helping either.
The offline retail business has been struggling as the latter months of the year that comprise the holiday shopping season often make up 40% of the retailing industry’s business. A weak holiday season can often be the end of many weaker retail businesses. We saw this when Circuit City filed for bankruptcy protection, likely Best Buy and other electronic retailers took some of their business and had enough cash to make it through.
The retail landscape could look far different in 2009 than it did in 2008. Companies are having a hard time with large loads of debt, consumer products that can’t be moved off the shelves and high labor costs. When holiday spending drops like it did this time around, the first quarter of 2009 might be even worse.
