Holiday Retail Sales Fall 4%, But Some Online Retailers Flourish

by Terri Potratz | December 26, 2008 at 10:09 pm

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Retailers have reported a stark decrease in sales this holiday season, citing the economy and bad weather as two major reasons for the decline - a drop of between 4 and 8% in total sales.

Normally around this time of year, following Thanksgiving and leading up to the winter holidays and Christmas, retail sales are at their highest with many stores entering into the black.

The figures, from the retail data service of MasterCard Advisors, show the 2008 holiday shopping season was the weakest in decades, as U.S. consumers cut spending as they confront a yearlong recession, mounting job losses and tighter credit.

"It's probably one of the most challenging holiday seasons we've ever had in modern times," said Michael McNamara, vice president of Research and Analysis at MasterCard Advisors.

"We had a very difficult economic environment. Weather patterns were not favorable toward the end of season, and that resulted in one of the most challenging economic seasons we've seen in decades."

However, people don't seem to be halting their spending habits altogether, as online retailers like Amazon and Future Shop have reported increases in sales. Amazon reported its best sales season 'ever':

Seattle-based Amazon.com also said the results for its U.S. site buck new retail sales data which described the 2008 holiday shopping season as one of the most challenging in modern times. Amazon said it sold more than 6.3 million items globally on Dec. 15, its peak day.
In the U.S., total retail sales dropped by up to eight per cent during the traditional November-December shopping period, even after retailers slashed prices to woo bargain hunters, MasterCard Inc.'s SpendingPulse unit said in a preliminary survey report.

And as The Gazette reported in yesterday’s paper, Canadian retailers also appear to be struggling as consumer confidence wanes.

But shoppers on both sides of the border still appear to be clicking their way to bargains.

Future Shop, Canada’s largest electronics retailer, said today its online Boxing Day sales are up in five provinces, including Quebec.

Among the most popular items sold through Amazon's website:

Amazon said top-sellers from November 15 through December 19 included Nintendo's Wii, which dominated the videogame category.

Among toys, the best-sellers included Jakks Pacific's Eyeclops night-vision goggles. In the electronics category, Samsung Electronics’ 52-inch LCD High-Definition television and Apple's 8-gigabyte iPod Touch led the gains.

Also a strong seller was Acer's Aspire One 8.9-inch netbook. The devices, which have little processing power, screens between nine and 12 inches wide diagonally and typically cost less than $US500 ($729), have been rising in popularity, according to technology-research firm iSupply.
Among DVDs, Amazon said Wall-E, The Dark Knight for Blu-ray and The Dark Knight sold well. Top sellers in books included The Tales of Beedle the Bard by JK Rowling, and two works by Stephenie Meyer, Eclipse and Breaking Dawn.

While Amazon's sales may have seen a whopping 17% increase, the trend doesn't appear to apply to all online retailers as sales fell 2.3% across the board. Yet compared to storefront retailers, online sales appear relatively healthy.