Holiday Shopping Declines: Implications for U.S. Marketers

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Published on March 05, 2013 with No Comments

Going into the 2012 holiday shopping season, there was a lot of talk regarding what some experts felt could be record-setting activity. With a plethora of new gadgets, apparel, and toys on the shelves, retailers were on course to make out like fat cats. Or were they? The malls were busy as usual, but the sales activity in the United States, at least, was very disappointing.

According to SpendingPulse, an information reporting service run by financial giant MasterCard, 2012 holiday retail sales came in as the nation’s lowest since 2008. As you may recall, that is when the country was buried in a deep, dark recession. The report showed that sales generated in the two months preceding Christmas were up 0.7%, which had many experts believing that overall holiday sales would increase by as much as 4%.

What’s the deal? As always, there are several factors, so let’s take a look at the potential issues and what the drop in holiday sales could mean for U.S. marketers moving forward.

Economy in Crisis
Apparently the plethora of sales, discounts, and savings wasn’t enough to get American consumers to come off their wallets. The drop in activity is being blamed on bad weather conditions brought on by storms such as Sandy, and distractions caused by the unfortunate massacre that occurred in Newtown, Connecticut. But the economy itself may have been the main reason the retail industry didn’t have its merriest Christmas.

Talks of the controversial fiscal cliff that would have reduced the nation’s budget deficit by cutting spending and increasing taxes heated to their highest point right in the middle of the holiday season. Consumers were understandably on edge. And while the idea was officially shelved due to the passing of the America Taxpayer Relief Act of 2012, CNN reports that more tax-related struggles are on the horizon.

The activity that takes place during the holiday season is a strong indicator of the economy’s health. In fact, some retailers generate as much as 40% of their annual sales in November and December. When those sales are not coming in, retailers are forced to offer deeper discounts, which of course appeals to bargain-hunting consumers, but also threatens to eat into their profits.

Analysts are concerned that the recent activity is a sign that consumers could continue to keep a tight clutch around their wallets and purses,  which would likely stall the growth of the economy in the new year. If this were to pan out, marketers would need to be innovative in their approach to creating new ways that encourage their target audiences to buy. Effective targeting and value-added experiences would reach an all new plateau of importance.

Location Matters
While holiday sales in the U.S. as a whole were down, some areas faired better than others. The data in the SpendingPulse report revealed that regions devastated by Sandy and other storms suffered most. In comparison to 2011, sales in the mid-Atlantic dropped by 3.9%, while the Northeast experienced a 1.4% drop. However, activity was up in the Northern Central region, which saw a 0.9% increase. The West and South enjoyed the biggest gains with increases between 2% and 3%.

No one can ever predict where disaster strikes. But marketers can maximize their effectiveness by localizing their strategy and finding other ways to connect with consumers. For example, by using tools like email and social media, retailers can stay in touch with customers who may be affected by the weather. The right message might ensure that sales are salvaged by directing customers to online stores or later down the road with irresistible savings that can be redeemed      in-store.

Online Is Where It’s At
U.S. retailers shouldn’t be too down about the SpendingPulse report. There is plenty to be encouraged about on the e-commerce front. A new report by Chase Holiday Pulse showed that online holiday shopping sales in the U.S. increased by an impressive 15.2%. Cyber Monday and extended sales campaigns were cited as trends that attributed to the increase. Marketers that have yet to create a strong internet presence are no doubt missing out on the prosperous pie born from the frenzy of online holiday shopping.

Will the ailing economy continue to impact consumer spending? It’s possible, but the show goes on. Literally, it would take something catastrophic to significantly disrupt the flow of businesses and industries that thrive across the board. Times are just forcing marketers to change. Those that adapt accordingly can get that healthy slice of pie.


Francis Santos is a writer for Benchmark Events, a best practices event marketing company.

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