General stores see sluggish holiday sales

By David Gill -- Home Textiles Today, 12/18/2000

WASHINGTON -The general-merchandise category had a less-than-jolly start to the holiday season in November. Sales at this channel (including department stores and mass merchants) rose just 0.2 percent ahead of October sales, to $26.8 billion.

In terms of overall retail, the general merchandisers had to sigh in relief. U.S. retail sales in November were $271.7 billion, down 0.4 percent from October. The main dragger was a 2.2 percent plummet in November's auto sales, to just $65.5 billion.

But the general stores had every opportunity to kick the holidays off in better style. Thanksgiving-weekend traffic was bottlenecked in several stores, according to evidence from the retailers; what's more, the weather turned cool at about that time, which spurred apparel sales to a fairly strong 0.8 percent increase over October, to $12.2 billion.

But, as analysts pointed out, the general merchandisers helped shoot themselves in the foot. As Mark Vitner, vp and economist with First Union Economics Group, commented, "Part of the slowdown [in department stores] may be due to excessive discounting, which is holding back the total value of sales."

Noting that chain-store sales in November increased at a slower rate than for January to October combined, Michael Niemira, vp of Bank of Tokyo-Mitsubishi, added, "The character of the month was split, with the early-month performance generally weak while the late-month sales performance was strong. Overall, the Christmas season got off to a mediocre start in November."

Of course, the National Retail Federation weighed in with a more positive view of last month. "The holiday season business gave a vigorous boost to November sales," said Rosalind Wells, the federation's chief economist. Wells added that the year-to-year growth in sales among the general-merchandise, apparel, furniture and home furnishings market was 9.4 percent, 11.4 percent and 6.4 percent, respectively.

Based on these numbers, Wells reiterated the NRF's expectations for this holiday season: "We still anticipate a good result for the entire holiday period and are confident that we'll meet our forecast of a 6 percent gain over last year." Consumers' tendency to shop late for the holidays should help December's sales totals, she added.

According to Niemira's more somber view, November's uneven results will probably characterize the remainder of the shopping season. "In part because of the very difficult sales comparison in December 2000 with last year, we expect that the industry will step up promotional activity in order to entice the consumer to spend," he said.

A somewhat more positive Vitner said if holiday sales follow the November trend, the 2000 holidays will have grown checkouts by 7 percent over 1999. "That is much better than what is being widely reported," he stated.