Judy Loy: Retailers Hoping for Holiday Cheer
Bellefonte (or as Matt Lauer said on the "Today" show, “Belafonte”— pronounced like Harry) was overrun by media and gawkers last Tuesday in anticipation of the spectacle that was to be the Jerry Sandusky preliminary hearing.
Main streets in Bellefonte were closed, and the YMCA closed that day because of its normal clientele’s inability to reach their destination. This made me wonder about one of my favorite shops in Bellefonte, Confer’s Jewelers. This is a family-owned jewelry store that is located on North Allegheny with a good reputation and wonderful customer service. How would the street restrictions affect them in the midst of the holiday retail season?
In my digging, I found that — not surprisingly — the holiday season reflects a large part of the sales for jewelry stores. It is estimated that holiday sales reflect 30 percent of annual sales for jewelers. A downturn in this season of sales can certainly impact a jeweler’s bottom line. Other retailers that are dependent on the holiday season are department stores and electronics/appliance stores, where holiday sales are about 24 percent and 23 percent of their sales, respectively. The data comes from the National Retail Federation for 2010.
The official start date of the holiday retail season varies by retailer and typically runs from November through December. A big weekend for holiday sales, the four-day weekend starting with Thanksgiving and including Black Friday raked in $50.06 billion in 2011, excluding automobile sales. That weekend’s sales rose 8.7 percent over the same time last year. To put that in perspective, the Black Friday weekend typically comprises 10 percent of total holiday sales.
The good news for the economy and retail sales is November reflects the sixth-straight month of increases in retail good sales. It is the 11th-straight month in increases in core sales, which excludes autos, gasoline and building materials. What’s lagging behind? Sales fell at grocery stores, building supply stores and restaurants. People are spending, but not on dining out, and they are certainly skimping on grocery bills. Automakers reported strong sales increases in the double digits for November.
The question remains on whether sales increases can be sustained. With unemployment at a stubborn high of 8.6 percent and payroll numbers staying fairly stagnant, citizens will be unable to spend what they don’t have, which is what got us into a lot of trouble in the first place and precipitated the European Crisis dogging the headlines right now. So far, Black Friday’s sales have not followed through. According to a survey of American consumers courtesy of HPS/Civic Science, 36 percent plan on spending less this year with an additional 20 percent expecting to spend a lot less. Only wealthier Americans plan on spending more.
Last Tuesday’s retail sales report missed estimates and disappointed many retailers. It rose 0.2 percent in November. With consumer spending accounting for two-thirds of the U.S. economy, healthy retail holiday sales would be a welcome diversion from the European credit-crisis woes. Sales for the holidays could suffer from the drop in household wealth in the third quarter and the fact that after-tax incomes have not kept pace with inflation.
One retailer that took a lot of heat and saw its stock price drop 10 percent is Best Buy. The company dropped its full-year earnings estimates and reported weak quarterly earnings. The stores were hurt by a one-two punch of heavy discounting and shoppers’ bargain hunting.
Apps that allow for easy price comparisons are hurting bricks-and-mortar stores everywhere. For example, RedLaser allows smartphone users to scan barcodes and comparison-shop immediately. Online shopping is as hot as ever as Cyber Monday (the Monday after Thanksgiving weekend) showed a 29 percent jump in online sales.
Luckily, the court proceeding Tuesday in Bellefonte only took a matter of minutes, as Sandusky waived his right to a preliminary hearing. The fear of closed roads and log jams that Bellefonte residents and shop owners carried for days were not realized. Holiday business is back to normal in the small town of Bellefonte. Hopefully, the holiday season will be merry for everyone, including the retailers.