Retailers’ Missed Goals Could Mean Edge for Wal-Mart (Touch Points)

Retailers failed to meet lowered expectations for holiday sales according to estimates from the National Retail Federation, but bargain -hunting shoppers and gift card redeemers closed a difficult 2007 with a bang.

The NRF forecast a modest 4 percent year-over-year gain for retailers in September, its lowest estimate since 2002. The International Council of Shopping Centers reported that sales growth for the November-December period will come in around 2.5 percent. ShopperTrak RCT and SpendingPulse, a report prepared by MasterCard Advisors, estimated gains of 3.6 percent.

ICSC estimates sales growth for December may be as little as 1 percent compared to 2006.

However, sales in the final full week of December jumped 14 percent versus 2006, according to ShopperTrak, as retailers continued to slash prices. The ICSC estimates about 10 percent of gift cards are redeemed in the week between Christmas and New Year’s Day, which translates to roughly $1.5 to $2 billion.

“In the days immediately following Christmas consumers flocked to stores to take advantage of post-Christmas sales and to begin redeeming gift cards, which was definitely a welcome sight for retailers this season,” ShopperTrak co-founder Bill Martin said in a statement.

Retailers were forced into margin-cutting sales to meet the challenges of consumer belt-tightening brought on through high fuel costs and decreasing home equity.

A poll by America’s Research Group stated more than 70 percent of consumers surveyed in the post-Christmas week said they had bought only on-sale items, the highest number in three years.

While sales may have been up from 2006, ARG reported that just 36 percent of consumers hit the stores in the post-Christmas week, the lowest total in six years.

“In the many years that ARG has been conducting Christmas retail surveys, I can’t remember uncovering a more conservative American shopper than during this holiday shopping period,” said C. Britt Beemer, founder and Chairman of ARG in a statement releasing the results. “It’s going to be hard for most retailers, even the best known brands, to put a positive message out to Wall Street this season.”

According to the ARG, when asked “What made you spend less this year,” 26 percent said high gas and home heating bills were having the biggest effect, and 23.6 percent said they had to cut back due to bills and debt.

These two responses combined are the highest in three years. In 2006, the combined response was 30.3 percent.

According to the latest ICSC report, only Wal-Mart Stores Inc. of Bentonville had revised its sales expectations for December upward from the previous week.

Wal-Mart, which increased earnings expectations for the year after beating Wall Street estimates in the third quarter, increased its December sales forecast 2 percent based on previous-week sales according to ICSC.

Target’s estimates were unchanged, while Kohl’s (-6 percent), J.C. Penney (-5 percent) and Macy’s (-5 percent) lowered expectations.

Despite aggressive price cuts during the back-to-school season at the first onset of spiking fuel prices and the housing/credit crunches, Wal-Mart outperformed its peers and again looks positioned to do so as the preferred destination for consumers feeling the squeeze.