Holiday Sales Come in Strong, but Consumers Will Remain Challenged in 2011

The 2010 holiday shopping season has turned out to be a solid one for retailers, with same-store sales growth for November/December coming in at about 4 percent and total sales possibly breaking $525 billion. But many analysts warn that the respectable holiday season does not mean that retailers have yet turned a corner.

A combination of relief over the end of the recession and deep discounting on the part of retailers led shoppers to loosen their purse strings in November and December of 2010, according to observers. Going forward, however, reality will set back in. High unemployment, stagnant wage growth, continued weakness in the housing sector and other pressures will mean that consumer spending will be at a more measured pace in 2011.

From the end of October through the end of December, U.S. consumers spent some $36.4 billion, representing an increase of 15.4 percent over the same period in 2009, according to MasterCard Advisors’ SpendingPulse report. (The report tracks national retail and services sales based on aggregate sales activity in the MasterCard payments network, coupled with survey-based estimates on cash and check payments).

This morning, ICSC released a preliminary tally of same-store sales results of 32 retail chains for December 2010. Same-store sales grew 3.1 percent, slightly below the expected 3.5 percent, but still better than the past few years. Retail research firms Retail Metrics and Kantar Retail showed similar results.

In November, same-store sales posted growth of 5.8 percent, according to ICSC. Shopper traffic rose 4.6 percent year-over-year, reported ShopperTrak, a Chicago-based research firm. By the time the final numbers come in, sales for November and December 2010 combined might total $525 billion, breaking the record set in 2007 with $508 billion in holiday spending, according to Craig Johnson, president of Customer Growth Partners, a New Canaan, Conn.-based research firm.

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