Consumer confidence took a beating

Last fall, the National Retail Federation (NRF) lowered its fourth quarter projections and a Consumer Board survey showed a drop in consumer confidence. With consumer spending accounting for about two-thirds of U.S. real gross domestic product, it’s a key economic indicator.

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The holiday season’s retail outcome will likely remain unclear until well into the first quarter of 2002 – while some offer reports that are better-than-expected, others have dismal projections.

Retail giant Wal-Mart, for example, has said it expects to see a rise in sales at the high end of its earlier projections of four to six percent for stores that have been open for at least one year.

Internet sales were up 36 percent during the holiday season, according to Bloomberg News, and Yahoo! Inc. reported that holiday sales on its shopping site rose 86 percent, almost reaching $1.4 billion.

And other discounters, such as the Target Corporation, were expected to do well, as were electronics and specialty stores. However, many in the industry predict it will be a season of mixed success for retailers both national and regional.

In fact, according to some reports, the numbers are expected to reveal the worst holiday season in more than a decade – especially for department stores. Federated Department Stores Inc. – parent of Macy’s and Bloomingdale’s – say it anticipates a decline in holiday sales by as much as 14 percent.

Johnson & Wales Professor of International Studies John Gounaris, who is also a former chief executive officer of Apex department store, expects the season’s retail sales outcome to be anywhere from plus or minus 2 percent.

Ronald Kuntze, Ph.D., assistant professor of marketing at Northeastern University, said that he expects the holiday retail outcome to be peppered with winners and losers, but the real time for concern will be first quarter 2002.

“I think after Christmas is going to be rough, especially the beginning of the year,” he said. “The first half of the year will be rough. The question is ‘How bad is the bleeding going to be?'”