With the Christmas shopping season winding down, here is my take on what happened:
- It was the latest Christmas shopping season in years, not getting rolling until Thanksgiving. People spent hours on Thanksgiving (and the day before, for those who were not traveling) researching their purchases online and in many cases, buying items online. Some retailers leaked their Black Friday circulars early, but these leaks were roundly ignored by the public. The traditional rush of online orders on the Monday after Thanksgiving never materialized because people had placed many of those orders already.
- The season also ended early, with the heavy retail traffic on the day after Christmas winding down by the middle of the afternoon, even though that day fell on a Saturday this year.
- Inventories were small. Individual items at individual stores ran out. Items as basic as gift wrap and candy ran out days before Christmas. There were few bare shelves, however; stores filled their shelves with whatever they had left to sell and made it look good. People often had to go to a second or third store to find essential things during Christmas week.
- With smaller inventories, discounting was minimal. Many items sold out at full retail price or 20 or 30 percent off.
- Shoppers visited most stores only once. They rarely checked back to see if prices had been cut. In my opinion, this is a sign of time pressure, with shoppers feeling that they did not have the time to do the intensive shopping that many had done last year.
- Not many shoppers were paying with credit cards. When compared to last year, there was a move from credit cards to debit cards and from debit cards to cash.
- When shoppers couldn’t find the items they wanted at the prices they wanted to pay, they traded down, looking for anything suitable at discount stores, especially Dollar Tree and Five Below.
- More people were giving items they made themselves, sometimes as a replacement for gift cards. In this connection, Christmas-themed items, such as gingerbread, were common.
- Clothing sales were down sharply, and when people bought clothing, they were looking for practical things. The fashionable thing to wear this year was last year’s stuff, and that’s a trend that has continued right through the end of the year.
- Jewelry, luxury items, and upscale department stores showed further weakness even when compared to last year.
- Outlet stores also fared poorly. I can only guess it was because they had relatively little interesting merchandise to offer.
- Sales of gift cards were apparently down slightly, and as in the last two years, there is no sign of a rush to spend gift cards by the people receiving them.
- With the smaller discounts and small leftover inventories, this shopping season was surely more profitable for retailers than last year’s rout, but not enough to provide much of a financial lift.
