Holiday sales rise 4.1 percent

[January 13, 2012]  NEW YORK (AP) -- A major retail trade organization is announcing that holiday sales rose 4.1 percent, better than its forecast for a 3.8 percent gain. But the season was clouded by heavy discounting needed to get shoppers to spend, particularly in the final weeks before Christmas.

The National Retail Federation said Thursday that retail sales for November and December combined totaled $471.5 billion. December sales rose 4.1 percent compared with a year ago, but declined 0.06 percent from November.

"In a matchup between the final two months of 2011, November clearly wins, but the in the end, retailers' promotions struck the right chord for budget-focused holiday shoppers," Jack Kleinhenz, the organization's chief economist, said in a statement. "Though we are seeing evidence that the economy still has a critical hold on consumers' purchases decisions, this strength in spending could continue in 2012."

The overall 4.1 percent pace for the holiday 2011 season was below the 5.2 percent increase for holiday 2010, but it was still well above the 2.6 percent average over the past 10 years.

NRF upgraded its growth forecast to 3.8 percent in mid-December from the original 2.8 percent made in early October when the economy's health looked more uncertain.

The announcement followed the Commerce Department's release on Thursday of overall sales figures for December. Sales eked out a 0.1 percent increase in the month, lifting sales to a seasonally adjusted $400.6 billion. NRF's measure for holiday sales excludes automotive dealers, gas stations and restaurants.

Heading into the season, stores knew it would be challenging to lure shoppers dealing with high unemployment, paltry wage growth and higher basic household costs. So retailers plied customers with free shipping and promised to match rivals' prices. Wal-Mart Stores Inc. resurrected layaway to help shoppers finance their purchases.

For the semi-official start of the shopping season, stores opened as early as Thanksgiving Day, pushing big discounts that resulted in record sales. But shoppers took a longer-than-usual breather after that early splurge. A mild winter and Christmas falling on a Sunday also encouraged people to wait until the last minute. That forced many stores to slash prices on coats and other cold-weather merchandise more than planned, hurting profits for many stores.

Starting on Sunday, thousands of retail executives will gather in New York for the annual NRF convention to share strategies for 2012 and offer insights into the consumer. NRF's spokeswoman Kathy Grannis expects that attendance for the four-day show will beat last year's 22,500 attendees.

[Associated Press; By ANNE D'INNOCENZIO]

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