2004 Holiday Sales – Not So Bad After All

January 14, 2005

2004 Holiday Sales – Not So Bad After All

New data shows holiday retail sales were stronger than initially reported. The U.S. Commerce Dept. said December 2004 retail sales rose 8.7% over the same month in 2003, one of the strongest holiday sales gains since 1999. In the jewelry category specifically, U.K.-based Signet Group said its U.S. comparable-store sales for the fourth quarter of 2004 were up 4.9% over the same period in 2003 – a particularly good figure as it was up against strong sales in fourth-quarter 2002 and 2003. Tiffany & Co. said its comp-stores sales for November and December were up 8% against 2003 figures.

The robust overall retail sales reported by the government, say economists, bodes well for the 2005 economy, since retailers now need to reorder through all segments. Also significant is that the Commerce Dept. measurements take into account many more types of retail sales than private groups such as the National Retail Federation do. Still, NRF figures were also bullish. It reported a 5.7% increase in holiday sales over last year, beating its own forecast of 4.5%.

The Commerce Dept. data includes a variety of sales other than those of department stores and specialty chains and features such basic categories as supermarkets, home improvement stores and pharmacies. It also counts online sales and sales of "experiences," such as travel, restaurants, theater and film tickets. The latter categories were particularly strong this holiday season, reported the Wall Street Journal. "Instead of giving the sweater or the scarf, people [were] looking for something different," observed Tracy Mullin, NRF president. Traditional retailers "need to figure out a way to either sell unusual nontraditional goods – things that are one-of-a-kind – or to make the shopping experience so enjoyable that there's a reason for the consumer to go into the store," said Mullin.

Reflecting the trend toward instore experiences, Signet reported sales were particularly strong for its Jared off-mall destination superstore concept. Another sign the instore experience may have been more important than discount prices was the news Signet did not participate in the higher level of discounting generally evident in the trade. The group broadly maintained its gross margins, says Terry Burman, Signet group CEO. Tiffany & Co., which has long promoted its instore experience, may also have benefited from consumer yearnings for a retail buying "moment."

by Peggy Jo Donahue

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