Now that the presents are put away, it's time to kick back and wait for the bacchanalia known as St. Patrick's Day. Or perhaps it's time to see how retailers are set to benefit from a gift-giving trend in January.
Did you forget those gift cards you stuffed into the stockings last year? According to figures from the International Council of Shopping Centers, chain-store sales for the week ended Jan. 2 rose 1.5% from the last week of Christmas shopping, and were 2.5% higher than the year-ago period.
December has already brought us some winning numbers. Consumer electronics sales bounced 7.3% compared with December 2008, meaning Best Buy
Retailers have been expecting the Christmas splurge to come later and later for several years, as weary consumers wait for the last possible minute to wrangle the best deal and save cash. We know Black Friday sales were slack, and with unemployment still at double-digit levels, consumers remain cautious when it comes to spending money.
A gift that keeps on giving
After several years of growth led to the holiday season extending well into January -- and beyond -- some analysts estimated that gift-card sales would fall 4.4% in 2009, to $87 billion. A mid-December survey by America's Research Group suggested that only 49% of shoppers had bought a gift card during the holidays, down from 53% a year ago.
But retailers were careful with their inventories this year. Wal-Mart carried 4% less stock going into the season despite having 10% more stores, while Gap
While other retailers were equally parsimonious in stocking their shelves, when a snowstorm hit the Northeast just before the holiday, sales on "Super Saturday," generally the second-best revenue day, fell 17.3%. Bare shelves and weather-related delays mean gift cards may be what steps up to save the season for retailers.
Christmas in January, February ...
I'm looking for Best Buy to be one of the big winners. Its gift card sales jumped 40% in November, with sales doubling during the last weekend of the month. More importantly -- and it's why retailers love gift cards -- Best Buy says consumers typically spend twice the value of the cards when they finally redeem them. Analysts are looking for the chain's domestic same-store sales in December to increase an extra 250 to 300 basis points as a result. The chain also doesn't have Circuit City to kick around anymore.
We're entering a time when companies will be lapping some very weak sales numbers. Other retail outlets don't even have to experience redemption rates on gift cards anywhere near Best Buy's for us to see some very good quarterly numbers. Indeed, analysts say people end up spending on average 25% to 50% more than the value of their gift card. Whatever the extra amount, that bodes well for retailers.
A spring in their step
Not every retailer will be a winner, gift cards or not. The recession damaged many good names such as Macy's
Let's turn it over to you. Which retailers will you go back to this year? Let us know in the comments section below.
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