That Santa feeling hasn't quite left shoppers yet

[December 28, 2010]  NEW YORK (AP) -- Forget the returns line. People hit the stores after Christmas to buy, indulging the rediscovered retail appetite that may have made 2010's holiday shopping season the biggest ever.

Revenue for the holiday season is on track to grow at its strongest rate since 2006. Total spending for November and December could exceed 2007 sales -- the best season on record. This despite an uncertain economy and a rise in thrifty habits.

Shoppers spent more on their family and friends and for the first time since before the Great Recession, treated themselves and even their pets. And after Christmas, even an East Coast blizzard didn't kill the mood as they headed to stores armed with gift cards and eyeing a new crop of discounts.

Mall of America's spokesman Dan Jasper reported Monday that shoppers are doing more buying and less returning this week than a year ago.

"People are definitely treating themselves," particularly to jeans and accessories, he said.

Shoppers spent more across the board this holiday season. Clothing sales rose 11.2 percent. Jewelry and luxury goods showed strong single-digit gains compared with a year ago, though they've not returned to pre-recession levels, according to data released late Monday by MasterCard Advisors' SpendingPulse.

Total consumer spending excluding autos, rose 5.5 percent to $584.3 billion from Nov. 5 through Dec. 24, compared with the same 50-day period a year ago, according to SpendingPulse.

That marks the biggest increase since 2007, when revenue rose 4.9 percent. Total sales surpassed 2007 holiday spending, which reached $566.34 billion, though the figures aren't adjusted for inflation.

"In 2008, stores were knocked down. In 2009, they found some stability, and in 2010, they took a step forward toward growth," said Michael McNamara, vice president of research and analysis for SpendingPulse, which tracks spending across all transactions including cash.

Spending was strong since the start of the holiday shopping season in November and the momentum continued through Christmas Eve, a surprising sign of strength for the economy. Consumer spending accounts for about 70 percent of U.S. economic activity.

People spent more even as they held on to frugal habits learned during the Great Recession, from focusing on big bargains to paying with cash. That conservative shopping mentality was clear as shoppers rummaged through clearance bins at stores and malls this week.

"I don't want to go any deeper into debt," said Dana Hall, 36, who arrived at Atlantic Station, a downtown shopping complex in Atlanta, on Sunday while killing time before picking up a passenger at the city's airport. Hall said he had kept his job throughout the recession, but the economic troubles turned him into a cash-only shopper.

Stores headed into the season with angst that they would have too much inventory. That's because they placed most of their orders in the spring when the economic recovery looked stronger than it seemed later in the year.

But stores struck the right notes to get careful holiday shoppers to buy more. They rolled out discounts starting in late October to cater to shoppers who wanted to stretch out their buying.

Merchants called it right in anticipating that gift givers would scrimp less and buy nicer, more traditional presents, like sweaters rather than pots and pans and other utilitarian gifts that were popular the last two years.

Free shipping was practically a given for online sales, which rose 15.4 percent, according to SpendingPulse. Stores stayed open later and some pulled all-nighters.

Americans didn't have to carelessly spend to make merchants happy. If every household bought one extra gift, that collective effect boosts retail sales.

The National Retail Federation predicts spending this holiday season, Nov. 1 through Dec. 31, will reach $451.5 billion, up 3.3 percent over last year. That forecast was upgraded earlier this month based on a robust November. That would be the biggest increase since 2006, and the largest total since a record $452.8 billion in 2007. The NRF forecast excludes revenue from restaurants, gas, autos and only looks at online sales from physical stores.

Strong after-Christmas sales could make this year the biggest holiday sales period of all time. Strong after-Christmas sales could make this year the biggest holiday sales period of all time. After-Christmas sales make up about 15 percent of holiday sales. The blizzard cut some stores' hours Sunday and Monday, but some analysts think shoppers will be undeterred given the new resiliency they have shown this season.

"The storm is more of a nuisance. So some consumers will put off their shopping for day or two, but by and large, stores will be able roll past this storm without too much concern," said Madison Riley, a strategist at Kurt Salmon Associates, a consulting firm.

Taubman Centers had to close four of its 26 malls early on Sunday, but spokeswoman Karen MacDonald said those that were open were much busier with new sales than with gift receipts. Based on a sampling of stores at a number of malls, 80 percent of the transactions were purchases, while returns and exchanges each accounted for 10 percent, she said.

"There are many people who are off this week; if they don't get out today, we expect a strong and long weekend," MacDonald said. "We feel very good."

[Associated Press; By ANNE D'INNOCENZIO]

AP Retail Writer Michelle Chapman contributed to the report.

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