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A Strong Holiday Shopping Season Bodes Well for 2012

The 2011 holiday shopping season turned out to be relatively strong for U.S. retailers, promising a stable year ahead.

Same-store sales for U.S. chains posted an increase of more than 3 percent during the November/December period, a performance comparable to 1994. At the same time, much of the shopping took place during periods of extreme promotions such as Black Friday and the retailers that posted the strongest gains were also the ones offering the most aggressive discounts, signaling consumers’ continued insistence on getting value for their money.

Going forward, this trend might eat away at retailers’ margins.

“Given the backdrop—that retailers are operating with 8.6 percent unemployment and a stagnant housing market—it turned out to be a successful holiday season,” says Ken Perkins, president of Retail Metrics Inc., an independent research firm tracking the retail industry. “But it was also more event-driven than in the past, with the bulk of shopping taking place during Black Friday and Super Saturday, and there was a significantly higher level of promotions and discounts.”

Hard numbers

ICSC estimates that U.S. chain store sales rose 3.5 percent this December, an improvement of 40 basis points over the increase posted last year. For the combined November/December period, ICSC reported a same-store sales increase of 3.3 percent. The figure is slightly lower than the 3.8 percent gain posted for November/December 2010, but still constitutes one of the best holiday shopping seasons in the past five years.

ICSC based its estimate on a survey of 25 retail chains. Its numbers don’t include the U.S. biggest retailer, Wal-Mart.

The Retail Metrics Same-Store Sales Index also beat expectations in December, posting a gain of 3.6 percent. For November and December combined, same-store sales rose 3.4 percent in 2011—lower than the 4 percent gain retailers achieved last year, but still a respectable figure.

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