By Suzanne Kapner And Sara Germano
American shoppers were on track to deliver a welcome Christmas
gift to retailers: the best holiday sales growth in three
years.
Sales gained momentum throughout December, according to the
International Council of Shopping Centers, as the countdown to Dec.
25 brought out more shoppers needing presents to put under the
tree.
"Sales got very strong leading up to Christmas," said Gerald
Storch, the former CEO of Toys "R" Us Inc., who next month will
take the helm of the company that owns Saks Fifth Avenue and Lord
& Taylor.
A series of encouraging economic indicators has raised optimism
about the U.S. economy that may have helped boost confidence during
the critical holiday shopping season. Among them: The economy
expanded at its fastest pace in 11 years in the third quarter, and
job growth is the strongest since 1999. The Thomson
Reuters/University of Michigan's measure of consumer confidence
rose in December to its highest level since January 2007.
Meanwhile, gas prices have fallen to their lowest levels in five
years, which is saving U.S. consumers more than $450 million a day,
according to auto club AAA.
"You can't minimize the importance of falling gas prices and the
increase in personal income," said Jack Kleinhenz, the chief
economist for the National Retail Federation, an industry trade
group. The NRF is expecting a 4.1% increase in sales during
November and December, the strongest rate since 2011, when sales
rose 4.8%.
A strong holiday will be welcome news to Wal-Mart Stores Inc.,
Target Corp. and other retailers that have been contending with
declining shopper traffic and formidable competition from Internet
rivals like Amazon.com Inc. Even if sales come in ahead of
expectations, they may have come at the expense of profitability
because companies had to rely heavily on promotions to lure
consumers to spend.
Retailers enjoyed stronger holiday sales in 2010 and 2011 as
pent-up demand after the recession led consumers to stronger
holiday spending. But then a stalling economic recovery,
persistently high levels of unemployment and stagnant wage growth
caused shoppers to become thriftier, constantly comparing prices
online and limiting their impulse purchases.
At Crossgates Mall in Albany, N.Y., parking spaces were hard to
come by on Dec. 24, as last-minute holiday shoppers packed the
mall's stores.
Cathy Lincourt, a physical therapist from Clifton Park, N.Y.,
was out Wednesday afternoon looking for a telescope for her
husband. She also was armed with coupons for stores like Macy's
Inc. and J.C. Penney Co. Ms. Lincourt, 43 years old, said falling
gasoline prices have put an extra $60 into her pocket a month.
"It's nice to have that extra bit," she said, adding that some of
it goes to savings.
Any sign that consumers are becoming less frugal would be
welcome but retailers remain cautious. "We are doing a bit better
than we thought in terms of traffic and sales," said Patrik Frisk,
the chief executive of Aldo Group, the Canadian footwear company
that operates the chain of Aldo shoe stores in the U.S.
Last year's holiday was marred by a surge in last-minute online
orders that caught delivery companies flat-footed and left many
Americans without their gifts on Christmas morning. This year,
FedEx Corp. and United Parcel Service Inc. worked with retailers to
forecast volumes ahead of time to be better prepared. In the days
before Christmas this year, both delivery giants started
selectively capping air-express deliveries that exceeded the
agreed-upon limits with minimal consumer outcry.
Early estimates this year indicate that Dec. 20, known as Super
Saturday, was the biggest shopping day of the season, edging out
Black Friday, which had held that spot for the past decade.
Saturday's sales totaled $23 billion, compared with Black Friday's
$20 billion, according to consulting firm Customer Growth
Partners.
Falling five days before Christmas, Super Saturday was "close
enough to create a sense of urgency in shoppers, but not too close
to conflict with most travel plans," said Craig Johnson, president
of Customer Growth Partners.
Black Friday, the day after Thanksgiving when retailers
traditionally offered their steepest discounts, has waned in
importance as retailers have spread their promotions earlier in
November.
The shift pulled sales forward and contributed to a drop in
sales over the Thanksgiving weekend. But overall sales excluding
newly opened or closed stores came in ahead of expectations for
retailers that report the monthly figure, according to Retail
Metrics.
Despite the gains, 2014 will still fall short of the boom years
that predated the recession when holiday sales growth exceeded 6%.
And some shoppers still say they feel strapped.
"It's been a tough year," said Denita Bell, a phlebotomist from
Hudson, N.Y., who planned to spend $400 Wednesday on gifts
including a pair of silver Nike KD basketball shoes for her
10-year-old son. "I started my shopping late because the bills came
in and I had to wait for my last paycheck."
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Sara
Germano at sara.germano@wsj.com
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