While statements of sluggish sales seem to be the norm in today’s economy, for awhile it seemed that there were many analysts who were hopeful that the 2008 holiday sales results would yield positive numbers and provide some glimmer of hope, hopefully providing a much needed boost to economic (primarily investor) confidence.

Unfortunately, it doesn’t appear that consumers were in spending mode this holiday season, and Christmas was likely much smaller for many American households than previous years.

Let’s first look at what the analysts were banking on:

The chart (source) above shows the growth and total sales from previous years, as well as the 2008 projections from the National Retail Federation (NRF). As you can see, the NRF initially projected that for 2008, despite the economic shortcomings, retail sales would rise upwards of 2.2%, or $10.2 billion compared to 2007.

From CNN Money:

The NRF’s projection would still be the weakest holiday sales gain in six years. That is, if it makes it to that level - NRF spokesman Scott Krugman said Friday that “it is going to be very difficult to hit that number.”

“It’s really three things that hammered retailers,” he said. “There were fewer holiday shopping days versus last year. We had bad winter weather in the final week before Christmas.”

The third thing that hurt retailers, according to Krugman, was deep discounting. Even though the big sales were designed to boost store traffic and sales, and “minimize the damage,” he said that level of discounting will ultimately hurt merchants’ bottom line.

With hopes of positive growth in retail sales now gone, let’s look at some of the 2008 holiday retail sales projections and data from other firms:

  • MasterCard Inc’s Spending Pulse: indicated total store sales down almost 3% for Nov/Dec
  • Beemer of America: expects a declination 2.8% for the holiday season
  • Global Hunter Securities: forecasting a 6% - 8% decline in sales for November through January

From what it looks like, a decline of anywhere between 2.5% - 4.0% seems to be the consensus across the country when all is said and done this holiday season.

While any decline in retail sales is significant, it’s even more catastrophic when it comes at a time where negative growth hasn’t been seen in years.

With such weak sales, not only are retailers going to find themselves with excess inventory, but they will also be losing a significant portion of their projected revenues. Even a slight loss for many retailers is enough to implement heavy job cuts and quite possibly complete closures.

Sadly, it appears that this recession is going to continue to drag on well into (and possibly beyond) 2009.

All data and information for this article was gathered from: here

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