By Craig Johnson, Customer Growth Partners
Despite being only the penultimate Saturday before Christmas, 2011’s “Super Saturday” Dec. 17 broke the all-time record for holiday spending, with an estimated $26 billion in total retail sales, according to retail consultancy Customer Growth Partners. The total was just shy of the record $27 billion spent on Black Friday.
This year’s Super Saturday spending broke the old record of $25 billion, set in 2007, when the last Saturday was an ideal three days before Christmas. [CGP based its estimate on its in-store field research of the nation’s 35 leading retailers. The company conducts this research in 40 major mall and off-mall venues nationally during the Black Friday weekend and continuing through the peak Holiday season.]
CGP’s analysis of holiday spending has found that consumer spending per capita has finally topped pre-recession 2007 demand levels. Based on government November retail data, and its proprietary retailer database, CGP found that average spending per adult will total $2,330 for the November-December holiday period, up from $2,212 in 2010 and topping the record $2,223 set in 2007.
Despite the Recession’s rigors, American consumers are far more resilient than the experts, and since 2009 they’ve deleveraged sharply, rebalancing their household finances—if they’re among the 91% with jobs. After completing this ‘Great Reset’ in their saving and spending patterns, consumers have resumed the historic 4% to 5% spending growth we saw earlier in the 2000’s.
But unlike the mid-2000’s, consumers are spending without cranking up their credit cards or tapping housing bubble-inflated home equity. Instead, they are spending smartly, and out of current cash flow—a much healthier foundation for sound, sustained growth.
Based on analysis of Dept of Labor data, CGP estimates 2011 Holiday spending per adult, for roughly the top, middle and lower third of households by income as follows:
> $70K Household Income: $3134/adult
$30-70K HHI: $1992
< $30K HHI: $1698.
Unlike retail’s high-growth years of the past decade, holiday spending this year has not been led by the consumer electronics and home improvement sectors, still mired in their own secular slumps. Instead, 2011’s retail rebound is being led by traditional “old” retail—including department stores, toys, and apparel—including the first real return of excitement and newness in fashion since before the recession.
Over the past couple years we have seen one of the great turnarounds in memory in the department store sector—led by two of the grand old names in the sector, Macy’s and Nordstrom, each founded over a century ago. Both have reinvented themselves since the recession, and have made themselves relevant to a new generation of shoppers—and they are each hitting the ball out of the park.
For the holiday season as a whole, CGP preseason forecast of +6.5% growth from 2010 remains on track, about double the consensus forecast of 2.5-3.0%. Although it is notable that other forecasters are belatedly raising their estimates, for example, the National Retail Federation from 2.8% to 3.8%. CGP is believed to have the most accurate Holiday sales forecasting record of any of the ten major retail forecasting organizations.
November retail sales (excluding auto/gasoline/restaurants), which represents about 45% of total Holiday sales, was up 5.7% year-over –year, consistent with CGP’s full season forecast, and reflecting the deferral of cold-weather apparel sales into December due to the warm November. The forecast 6.5% growth represents the strongest year-over-year holiday growth since 2004, and will yield $554B in total Retail sales, topping the total sales record of $521B of 2010.
The real surprise this year may be the day after Christmas. England calls it ‘Boxing Day’, but it will be a boffo day for American retailers, since the 26th is a Monday, with most offices closed for the three day weekend. Shoppers will still be looking for ‘self-gifting’ bargains, but armed with gift cards, consumers are much more likely to pay full price for the new merchandise that smart retailers will put on the floor for the post-Christmas crowds.
Last year, the middle Atlantic and Northeast was hit by a huge post-Christmas snowstorm, wiping out December 26 sales for over 15% of the country, and holding total sales that day to barely $20B nationally.
This year, we think a lot of stores may stay open until Midnight with extended hours, December 26th, may even top Black Friday, with $29 billion in gross sales—although returns for cash will need to be netted against the total. But after the kinds of crowds we’re seeing at the malls, with parking lots often at 110% of capacity, the key post-Christmas week is a true ‘second season’ that will propel the full holiday shopping season to a new all-time record.
Craig Johnson is president of Customer Growth Partners in New Canaan, Conn., a consulting and research firm serving the retail and other consumer industries. Founded in 2001, CGP has conducted both proprietary and public forecasts of holiday retail sales annually since then.