Holiday retail sales take a hit as cliff fears weigh on shoppers
Shoppers hoping to seize on after-Christmas sales were met with gridlock last week in downtown Greenwich.
Retailers didn’t fare any better as gridlock in Washington, D.C. contributed to lackluster sales for the two months leading up to Dec. 25, according to one report.
In-store and online retail sales from Oct. 28 to Dec. 24 increased 0.7 percent relative to the same period a year ago, according to the MasterCard Advisors SpendingPulse report, released Dec. 25.
Prior to Thanksgiving, industry groups such as the National Retail Federation and the International Council of Shopping Centers had projected that holiday sales would increase between 3 and 4 percent compared with last year.
Shoppers packed into Greenwich’s central business district Dec. 26 with many stores marketing after-Christmas sales.
Several store managers and owners of Greenwich Avenue boutiques said holiday sales were on par with or slightly above their 2011 marks, while most expressed optimism that a later-than-usual shopping rush would offset what was a slow start to the 2012 holiday season as the region recuperated from Hurricane Sandy.
“The last two weeks, those were really when it started to get cranking,” said Scott Mitchell, whose family owns five luxury clothing stores, including Richard’s in Greenwich, Mitchell’s in Westport, Marsh’s in Huntington, N.Y., and Wilkes Bashford in San Francisco and Palo Alto, Calif.
Mitchell said the rush “was definitely later” this year due to Hurricane Sandy, which he said impacted the family’s Connecticut and New York locations.
In Connecticut, Sandy cost the store “about a week” of business, Mitchell said. “Most of the purchasing that would’ve taken place that week was delayed.”
At Rinfret Home & Garden, an interior design and décor shop in Greenwich, owner Cindy Rinfret said there has been a heightened sense of optimism this year.
“There seems to have been a little bit of a change,” Rinfret said. “People are being more optimistic.”
She said there has been a steady flow of customers this holiday season, with sales about even compared with a year ago.
Retail industry expert Howard Davidowitz, chairman of Davidowitz & Associates, a New York City-based national retail and investment banking firm, called the holiday season “a train wreck.”
With consumer spending accounting for about 70 percent of the U.S. economy and fourth quarter U.S. gross domestic product (GDP) growth expected to be just 1 percent, “How could you possibly have anything except a train wreck?” Davidowitz said. “Our GDP growth has collapsed. We’re going to be negative in the first quarter (of 2013).”
He said the meager economic growth coupled with uncertainty over the fiscal cliff would likely threaten luxury sales, which have been the one bright spot in an otherwise hurting industry.
While the top 10 to 20 percent of U.S. earners “have done very well” over the past two years with capital markets showing strong growth, Davidowitz said, “I think that top group, who has done very well, are very concerned over what’s going on” in Washington with negotiations over the fiscal cliff.
“It’s the top people who are very concerned and that’s why you’re going to see luxury spending get hit.”
At Richard’s in Greenwich, Mitchell acknowledged that customers are mindful of the possibility of significant tax increases starting Jan. 1.
“Everybody’s worried about the fiscal cliff, but everybody knows where they are financially,” Mitchell said.
He expressed confidence in the luxury retail sector’s ability to bounce back from adverse economic events. “Luxury took the biggest hit during the recession, but it came back the fastest.”