Discounts Don't Help Retail Sales

Discounts Don't Help Retail Sales
January 05, 2009

Price-slashing failed to rescue a bleak holiday season for beleaguered retailers, as sales plunged across most categories on shrinking consumer spending, according to The Wall Street Journal. Despite a flurry of last-minute shoppers lured by the deep discounts, total retail sales, excluding automobiles, fell over the year-earlier period by 5.5 percent in November and 8 percent in December through Christmas Eve, according to MasterCard Inc.'s SpendingPulse unit. Excluding gasoline sales, the fall in overall retail sales is a more modest 2.5 percent drop in November and a 4 percent decline in December. The holiday retail-sales decline was much worse than the already-dire picture painted by industry forecasts, which had predicted sales ranging from a 1 percent drop to a more-optimistic increase of 2.2 percent. Luxury goods, once considered immune from economic turmoil, were hardest hit, with sales falling 21.2 percent, compared with a jump of 7.5 percent a year ago, when the economy had just begun to sputter. Including jewelry sales, the luxury sector plunged by 34.5 percent.