Holiday Sales Slower Than Expected

Medill News Service - November 13, 2007 –

Holiday decorations are out in storefronts, but according to numbers from two Chicago-based Web sites that aim to save consumers money, shoppers may not be.

An online survey released Tuesday by coupon and discount site CoolSavings.com indicated that more than 40 percent of consumers plan to spend less on holiday gifts this season than they did last year.

Additionally, October has seen a slow start to the shopping season according to the ShopLocal Index, released on Monday by ShopLocal.com, a Web site that lets consumers compare discounts in local circulars with online prices at vendors such as Amazon.com Inc.

The index, which tracks the influence of the Internet on in-store shopping had only a 22 percent year-to-year increase for the months of September /October, compared to a 29 percent year-to-year increase through the month of August. This showed retail slowing despite the beginning of the holiday shopping season.

“Things are much more expensive and the economy is not wonderful. Gas prices are way too high causing less disposable income,” said Liz Smelcer, a tourist from Knoxville, Tenn. who was shopping Tuesday on State Street with a Macy’s Inc. bag in hand.

According to Cool Interactive Inc., 52 percent of those consumers planning to spend less on holiday gifts this season mentioned “earning less money” or having “more expenses” as the primary reason.

“People are more concerned about keeping their homes,” said Tiffany Hughes, who was doing some non-holiday shopping on State Street during her lunch break. She was referring to the housing market and sub-prime mortgages.

Shoplocal LLC’s index bolstered these findings. The decrease in the index occurred despite a 12 percent year-to-year increase in circular promotions by retailers during September/October.

“We feel like it’s going to be a long holiday selling season . . . from last year. So we’re seeing that they’re advertising sooner,” said Marcy Dockery, spokeswoman for Shoplocal.

Despite this, some consumers are waiting for still better bargains.

“Did I start looking ? Yeah. But I haven’t bought anything yet,” said Hughes. She said she is a big sale shopper and would be waiting for the best deals.

Shopper Mike Shull of Boulder, Colo. who was in Chicago Tuesday for a meeting, concurred. “I think a lot of people are waiting for sales this year because of the economy,” he said.

“With the potential for a ‘soft’ season, we expect to see increased promotions and heavy discounts on gift items,” said ShopLocal CEO Vikram Sharma in a press statement.

Not all retailers are feeling the pull of a slowdown, however, such as Chicago Premium Outlets in Aurora, a Simon Property Group Inc. company.

“The outlets become the solution in harder times,” said spokewoman Michele Rothstein who says that Chicago Premium Outlets are “well positioned” during times of retail decline.