The holiday shopping season got off to a disappointing start as heavy discounting took its toll on overall spending.
Retailers saw online and in-store sales drop to $57.4 billion during the Thanksgiving weekend, down from $59.1 billion last year, according to the National Retail Federation.
Even more discouraging, shoppers spent 4 percent less Thursday through Sunday, with consumers spending an average of $407.02 compared to $423.55 last year, the industry group said.
“I think the real consumer spoke loud and clear,” Belus Capital analyst Brian Sozzi said. “It was a disappointing start.”
The Thanksgiving weekend is a closely watched barometer of consumer spending heading into the holiday season, which accounts for roughly 30 percent of sales.
Meanwhile, online shopping was a bright spot during the Black Friday weekend, rising 19 percent compared to last year, according to a survey from IBM. That’s roughly in line with 20 percent growth in 2012.
Sozzi said consumers appear to be either shopping online or in stores — but not both. He predicts that traditional retailers will resort to even deeper discounts, further denting profit margins, to compete with Amazon and other web rivals.
“I expect retailers now will ramp up promotions,” he said, adding it will be negative for many retail stocks.
He predicted it will be tough going for already struggling retailers such as JCPenney and Sears.
Better able to withstand the pressures are retailers such as Target that are building a good online presence, Sozzi said. “Their numbers may not be as bad as you would think,” he said.