Retailers lured millions of Americans out of bed to snap up bargains on Thanksgiving weekend. But will consumers stay awake long enough to boost to inventory restocking during the slack winter season?
Transportation carriers hope ringing cash registers and online sales will produce a boomlet in post-holiday restocking that boosts containerized imports during what’s normally the slowest period of the year.
It wouldn’t take much. Wary of being stuck with unsold goods that require markdowns, retailers entered the holiday season with minimal stockpiles. Retailers’ seasonally adjusted inventory-to-sales ratio in September was 1.39, the lowest for the month in more than two decades, according to Commerce Department data.
“I expect a bit of restocking through the Lunar New Year, but after that we’re likely to see only modest growth,” Journal of Commerce Economist Mario O. Moreno said. He forecasts overall U.S. containerized imports to rise 2.8 percent next year after 2 percent growth this year.
The timing of 2012’s Lunar New Year, which falls earlier than usual on Jan. 23, could push shippers to rush import shipments before Chinese factories shut down for the holiday. The ripples will show up in trans-Pacific import volume, which depends heavily on retail shipments.
Ocean carriers appear to be banking on the tight calendar to pump up rates that have declined steadily since August, and have approached freefall on Asia-Europe lanes. Several trans-Pacific carriers have announced rate increases between Christmas and the Lunar New Year.
The Transpacific Stabilization Agreement last month said its members plan to impose a minimum increase of $400 per 40-foot container on U.S. imports starting Jan. 1. The TSA said the moves are being taken in advance of annual contracting guidelines that likely will be influenced heavily by the state of demand on the Pacific. That demand will hinge on the consumer activity running up to the holidays and on the strategies retailers adopt for restocking goods or maintaining lean inventories.
Moreno expects trans-Pacific imports to rise just 2.7 percent after an increase of no more than 0.2 percent this year. Import volume has trended down in recent months. Trans-Pacific imports fell 5.8 percent in October, the fifth straight month of year-over-year decline.
The National Retail Federation and Hackett Associates have been ratcheting down forecasts in their monthly Global Port Tracker, which tracks volume at the 10 busiest U.S. ports for container imports. Last month, the Port Tracker forecast year-over-year declines in each month through March.
Gauging the impact of holiday sales on shipping volumes is tricky. Retail forecasts for the holiday season are complicated by the annual hype surrounding Black Friday, the day retail chains supposedly break into profitability for the year. The hype was heavier than ever this year, and apparently so were the middle-of-the-night shopping crowds.
An NRF survey by BIGresearch indicated 24.4 percent of Black Friday shoppers were at stores by midnight, waiting for stores to open or visiting stores that opened Thanksgiving night. The survey estimated 226 million shopping visits to stores and Web sites over the holiday weekend, up from 212 million last year, and a 9.2 percent jump in average spending to $398.62.
But as individual retail chains began reporting their numbers, some analysts said the start of the holiday selling season was less rosy than it first appeared, and that retailers’ momentum will require more than holiday bargain-hunters and insomniacs.
For many retailers, strong Black Friday results salvaged a month that began with tepid sales. “Despite the Black Friday media hype, chain store sales were very disappointing in November,” Chris G. Christopher Jr., senior principal economist at IHS Global Insight, said in a research note.
One reason was that consumers may simply have been waiting for the big one-time discounts and piled all the purchasing into one weekend. If that’s true, it puts more pressure on retailers to remain disciplined with inventories and accept stock-outs on goods rather than face the prospect of margin-killing steep discounting around the holidays.
The International Council of Shopping Centers reported a 3.2 percent year-over-year rise in its tally of same-store sales, which exclude Wal-Mart in November. It was the slowest increase since March. Chain stores’ month-to-month sales dropped for the second time in a row.
It was “a good, but not great, start to the holiday shopping season,” said Ken Perkins, president of research firm Retail Metrics in Swampscott, Mass. More than half of retailers his firm tracks posted higher-than-expected sales in November, but he noted traffic was boosted by heavy discounting.
Retailers’ results were uneven. Sales were strongest at the high and low ends of the retail spectrum, continuing a trend that began during the recession. High-end retailers such as Nordstrom have posted higher same-store comparisons with a year earlier. So have chain stores catering to the low-price market. Department stores have been squeezed from both sides, although there were exceptions, including Macy’s, which posted a 4.8 percent gain in stores open at least a year.
Moreno said the trend is reflected in starkly different rates of containerized import growth from North Europe, which include a larger proportion of luxury imports, and Asia, which is dominated by mass-market goods. Imports from North Europe will rise 8 to 10 percent this year while trans-Pacific imports will be virtually flat.
“The American retail space is changing dramatically as higher poverty rates and more income inequality are forcing retailers to market more to the high and low end of the income spectrum,” Christopher said. “Poverty rates and income inequality are up three years in a row, and even though consumer confidence improved recently, it is still at recessionary levels.”
The Conference Board’s Consumer Confidence Index rose to 56 in November from 40.9 in October, as survey respondents expressed more positive views of the current economy and future expectations. However, Lynn Franco, director of the Conference Board’s Consumer Research Center, said the overall readings “remain historically weak.”
Still, the economy is showing signs of gradual recovery. The U.S. has added an average of 132,000 jobs a month this year, close to the 150,000 economists consider necessary to keep pace with population growth, but sluggish jobs and housing markets remain a drag on consumer spending.
Cautious consumers are seeking bargains, retailers say. “We expect a competitive and promotional environment as consumers continue to focus on value,” Target CEO Gregg Steinhafel said. “We expect December to remain fiercely competitive and highly promotional,” Gap CEO Glenn Murphy said.
“Holiday shoppers are looking for good deals, and the days of throwing caution to the wind are long gone,” Christopher said.
Perkins and other analysts say retailers’ aggressive marketing and deep discounting for the Black Friday weekend could weaken sales totals during the rest of the holiday season. “Our concern is that deep discounting in November pulled forward sales out of December, and we are likely to see very modest traffic and conversion levels” for the first half of this month, Perkins said.
Another complication in forecasting retail sales is weather patterns, which can skew short-term demand. Unusually warm weather in the Northeast this fall has reduced demand for gloves and overcoats. Until winter merchandise starts moving off retail shelves, store buyers are reluctant to add to their inventories.
And the modest gains in sales at brick-and-mortar sales have been balanced by continued rapid growth in online spending. Research firm ComScore, which tracks Web use, reported that online shoppers spent nearly $6 billion in the post-Thanksgiving week starting on “Cyber Monday.”
ComScore said online sales were up 15 percent year-over-year to $18.7 billion in November and the first two days of December. Most estimates put online shopping at 8 to 10 percent of holiday spending.