Don’t believe the holiday hype: Christmas is going to be a lump of coal for retailers.
That, at least, is the minority opinion of a few Grinchy forecasters, who say a recent tide of optimism about consumer spending is overblown.
Last week, the National Retail Federation raised its forecast for the crucial November-December shopping period, saying it now expects spending will increase a solid 3.3 percent, up a percentage point from its previous estimate.
Buoyed by better-than-expected November sales data, big Wall Street banks including JPMorgan, Credit Suisse and Barclays Capital likewise boosted their outlooks for fourth-quarter growth.
Nevertheless, November’s strong showing was driven more by shoppers being opportunistic than optimistic, according to Robin Lewis, publisher of the Robin Report and co-author of “The New Rules of Retail,” a new book on the industry’s changing competitive landscape.
Clothing sales were strong in November, but “a lot of it is people filling holes in their closets” by pouncing on “Black Friday” bargains after scrimping for the past several seasons, according to Lewis.
Indeed, most retail forecasters have gotten carried away with a glass-half-full approach to this year’s holiday season, says Ed Farrell, director of the Consumer Reports National Research Center. While the research unit accurately predicted November’s strong showing, Farrell said it wasn’t a sign that consumers are feeling better about the economy.
“You had people buying big-screen TVs because they needed a new one and it was cheap” — not because consumers were feeling better about the economy, according to Farrell.
Meanwhile, demand for “personal electronics” such as iPods, mobile phones and digital cameras looks weak.
That’s because such gadgets are “things people want, not things people need,” according to Farrell. Shoppers are sticking mainly to the latter as unemployment continues to flirt with the double digits, he says.