Plunging consumer confidence, the rickety economy, and fallout from Hurricane Sandy in the northeast combined to create a disappointing holiday sales season for retailers.
“It’s a lost season,” said MasterCard Inc.’s Spending Pulse’s Vice President of Research and Analysis Michael McNamara. According to MasterCard’s research, from Oct. 28 to Christmas Eve, holiday retail sales increased just 0.7% from last year.
Retailers rely heavily on holiday spending, which accounts for roughly a quarter of their annual sales. But analysts say the 2012 holiday sales season marked the slowest growth in spending since 2008.
Several factors combined to produce lackluster holiday sales. A recent study found that consumer confidence at a five-month low. Shoppers in the storm ravaged Northeast–which makes up over a fifth of U.S. retail sales–dramatically curbed their purchasing patterns. Even online shopping figures showed lower growth trends, rising only 8.4% from last year for a total $48 billion in online sales.
The upside? Deep post-holiday discounts for bargain hunters.
“They’ve got new merchandise coming in right behind it and they recognize that it’s really now about recouping what sales they’ve lost and the lack of excitement,” says sales analyst Marshal Cohen. “So look for the sales to carry through for most of January but not much further than that.”